Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 27, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Vapotherm, Inc. | |
Entity Central Index Key | 0001253176 | |
Entity Tax Identification Number | 46-2259298 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity File Number | 001-38740 | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 100 Domain Drive | |
Entity Address, City or Town | Exeter | |
Entity Address, State or Province | NH | |
Entity Address, Postal Zip Code | 03833 | |
City Area Code | 603 | |
Local Phone Number | 658-0011 | |
Entity Common Stock, Shares Outstanding | 46,220,065 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | VAPO | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 25,713 | $ 15,738 |
Accounts receivable, net of expected credit losses of $251 and $227, respectively | 8,403 | 9,102 |
Inventories, net | 28,499 | 32,980 |
Prepaid expenses and other current assets | 3,444 | 2,081 |
Total current assets | 66,059 | 59,901 |
Property and equipment, net | 25,673 | 26,636 |
Operating lease right-of-use assets | 5,030 | 5,805 |
Restricted cash | 1,109 | 1,109 |
Goodwill | 549 | 536 |
Deferred income tax assets | 125 | 96 |
Other long-term assets | 2,102 | 2,112 |
Total assets | 100,647 | 96,195 |
Current liabilities | ||
Accounts payable | 2,974 | 2,739 |
Contract liabilities | 1,197 | 1,216 |
Accrued expenses and other current liabilities | 11,810 | 15,609 |
Total current liabilities | 15,981 | 19,564 |
Long-term loans payable, net | 99,270 | 96,994 |
Other long-term liabilities | 7,750 | 7,827 |
Total liabilities | 123,001 | 124,385 |
Commitments and contingencies (Note 8) | ||
Stockholders' deficit | ||
Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | ||
Common stock ($0.001 par value) 175,000,000 shares authorized as of March 31, 2023 and December 31, 2022, 46,215,938 and 28,516,047 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 46 | 29 |
Additional paid-in capital | 485,714 | 461,940 |
Accumulated other comprehensive loss | (22) | (157) |
Accumulated deficit | (508,092) | (490,002) |
Total stockholders' deficit | (22,354) | (28,190) |
Total liabilities and stockholders' deficit | $ 100,647 | $ 96,195 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Expected credit losses | $ 251 | $ 227 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 175,000,000 | 175,000,000 |
Common stock, shares issued | 46,215,938 | 28,516,047 |
Common stock, shares outstanding | 46,215,938 | 28,516,047 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net revenue | $ 17,731,000 | $ 21,622,000 |
Cost of revenue | 11,519,000 | 13,730,000 |
Gross profit | 6,212,000 | 7,892,000 |
Operating expenses | ||
Research and development | 3,987,000 | 5,549,000 |
Sales and marketing | 9,592,000 | 13,322,000 |
General and administrative | 5,770,000 | 8,954,000 |
Impairment of right-of-use assets | 432,000 | 0 |
Loss on disposal of property and equipment | 55,000 | |
Total operating expenses | 19,836,000 | 27,825,000 |
Loss from operations | (13,624,000) | (19,933,000) |
Other (expense) income | ||
Interest expense | (4,331,000) | (1,747,000) |
Interest income | 28,000 | 17,000 |
Foreign currency loss | (154,000) | (69,000) |
Loss on extinguishment of debt | (1,114,000) | |
Net loss before income taxes | (18,081,000) | (22,846,000) |
Provision for income taxes | 9,000 | 92,000 |
Net loss | (18,090,000) | (22,938,000) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 135,000 | (55,000) |
Total other comprehensive income (loss) | 135,000 | (55,000) |
Total comprehensive loss | $ (17,955,000) | $ (22,993,000) |
Net loss per share - basic | $ (0.45) | $ (0.87) |
Net loss per share - diluted | $ (0.45) | $ (0.87) |
Weighted-average number of shares used in calculating net loss per share, basic | 40,608,605 | 26,321,087 |
Weighted-average number of shares used in calculating net loss per share, diluted | 40,608,605 | 26,321,087 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance at Dec. 31, 2021 | $ 66,667 | $ 26 | $ 443,358 | $ 26 | $ (376,743) |
Beginning balance, shares at Dec. 31, 2021 | 26,126,253 | ||||
Issuance of common stock upon exercise of options | 12 | 12 | |||
Issuance of common stock upon exercise of options, shares | 1,227 | ||||
Issuance of common stock with restricted stock units and awards | 10 | 10 | |||
Issuance of common stock with restricted stock units and awards, shares | 60,488 | ||||
Issuance of common stock for services | 76 | 76 | |||
Issuance of common stock for services, shares | 3,683 | ||||
Issuance of common stock to satisfy contingent and consideration | 5,630 | $ 1 | 5,629 | ||
Issuance of common stock to satisfy contingent and consideration, shares | 368,168 | ||||
Issuance of common stock warrants | 1,157 | 1,157 | |||
Stock-based compensation expense | 3,370 | 3,370 | |||
Foreign currency translation adjustment | (55) | (55) | |||
Net loss | (22,938) | (22,938) | |||
Ending balance at Mar. 31, 2022 | 53,929 | $ 27 | 453,612 | (29) | (399,681) |
Ending balance, shares at Mar. 31, 2022 | 26,559,819 | ||||
Beginning balance at Dec. 31, 2022 | (28,190) | $ 29 | 461,940 | (157) | (490,002) |
Beginning balance, shares at Dec. 31, 2022 | 28,516,047 | ||||
Issuance of common stock and pre-funded warrants and accompanying warrants in private placement, net | 20,943 | $ 17 | 20,926 | ||
Issuance of common stock and pre-funded warrants and accompanying warrants in private placement, net, Shares | 17,502,244 | ||||
Issuance of common stock upon exercise of options, shares | 228 | ||||
Issuance of common stock with restricted stock units and awards, shares | 175,732 | ||||
Issuance of common stock for services | 59 | 59 | |||
Issuance of common stock for services, shares | 21,687 | ||||
Issuance of common stock warrants | 28 | 28 | |||
Stock-based compensation expense | 2,761 | 2,761 | |||
Foreign currency translation adjustment | 135 | 135 | |||
Net loss | (18,090) | (18,090) | |||
Ending balance at Mar. 31, 2023 | $ (22,354) | $ 46 | $ 485,714 | $ (22) | $ (508,092) |
Ending balance, shares at Mar. 31, 2023 | 46,215,938 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (18,090,000) | $ (22,938,000) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Stock-based compensation expense | 2,820,000 | 3,446,000 |
Depreciation and amortization | 1,248,000 | 1,391,000 |
Provision for credit losses | 49,000 | 177,000 |
Provision for inventory valuation | 165,000 | 150,000 |
Non-cash lease expense | 387,000 | 519,000 |
Change in fair value of contingent consideration | (188,000) | |
Impairment of right-of-use assets | 432,000 | 0 |
Loss on disposal of property and equipment | 55,000 | |
Placed units reserve | 344,000 | 151,000 |
Interest paid in-kind | 2,194,000 | |
Amortization of discount on debt | 184,000 | 139,000 |
Deferred income taxes | 9,000 | 83,000 |
Loss on extinguishment of debt | 1,114,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 663,000 | 805,000 |
Inventories | 4,384,000 | (1,650,000) |
Prepaid expenses and other assets | (1,234,000) | (927,000) |
Accounts payable | 114,000 | 84,000 |
Contract liabilities | (25,000) | (652,000) |
Accrued expenses and other current liabilities | (3,148,000) | (11,882,000) |
Operating lease liabilities, current and long-term | (585,000) | (293,000) |
Net cash used in operating activities | (10,034,000) | (30,471,000) |
Cash flows from investing activities | ||
Purchases of property and equipment | (1,004,000) | (3,008,000) |
Net cash used in investing activities | (1,004,000) | (3,008,000) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock and pre-funded warrants and accompanying warrants in private placement, net of issuance costs | 20,943,000 | |
Proceeds from loans, net of discount | 99,094,000 | |
Repayment of loans | (40,000,000) | |
Payments of debt extinguishment costs | (817,000) | |
Payment of debt issuance costs | (1,365,000) | |
Repayments on revolving loan facility | (6,608,000) | |
Payment of contingent consideration | (135,000) | |
Proceeds from exercise of stock options | 12,000 | |
Net cash provided by financing activities | 20,943,000 | 50,181,000 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 70,000 | (10,000) |
Net increase in cash, cash equivalents and restricted cash | 9,975,000 | 16,692,000 |
Cash, cash equivalents and restricted cash | ||
Beginning of period | 16,847,000 | 57,324,000 |
End of period | 26,822,000 | 74,016,000 |
Supplemental disclosures of cash flow information | ||
Interest paid during the period | 1,284,000 | 983,000 |
Property and equipment purchases in accounts payable and accrued expenses | 354,000 | 1,581,000 |
Debt issuance costs in accounts payable and accrued expenses | 202,000 | |
Issuance of common stock to satisfy contingent consideration | 5,630,000 | |
Issuance of common stock warrants in conjunction with long term debt | $ 28,000 | 1,157,000 |
Issuance of common stock upon vesting of restricted stock units | $ 10,000 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 1. Description of Business Vapotherm, Inc. (the “Company”) is a global medical technology company primarily focused on the care of patients of all ages suffering from respiratory distress, whether associated with complex lung diseases such as chronic obstructive pulmonary disease (“COPD”), congestive heart failure, pneumonia, asthma and COVID-19 or other systemic conditions. The Company’s mission is to improve the lives of patients suffering from complex lung disease and other forms of respiratory distress while reducing the cost of their care through integrated device and digital solutions. The Company’s device solutions are focused on High Velocity Nasal Insufflation (“HVNI”, or “High Velocity Therapy”), which delivers non-invasive ventilatory support to patients by providing heated, humidified, oxygenated air at high velocities through a small-bore nasal interface, and on closed loop control systems such as our Oxygen Assist Module (“OAM”), designed to automatically maintain a patient’s pulse oxygen saturation (“SpO2”) levels within a specified range for a defined period of time. The Company’s digital solutions are focused on remote patient monitoring, using proprietary algorithms to predict impending respiratory episodes before they occur and coordinate timely intervention, obviating the need for costly hospital admissions and minimizing patient distress. Although the Company exited its standalone remote patient monitoring business, the Company is using the underlying technology to develop digital capabilities for the Company’s devices. While these device and digital solutions function independently, the Company believes leveraging the two together can create a unique healthcare ecosystem, focused on delivering high quality, efficient respiratory care in a variety of settings. High Velocity Therapy is an advanced form of high flow therapy that is differentiated due to its ability to deliver breathing gases, including oxygen, at a high velocity, for the treatment of spontaneously breathing patients suffering from respiratory distress, including Type 1 hypoxic respiratory distress, like that experienced by patients with pneumonia or COVID-19, or Type 2 hypercapnic respiratory distress, like that experienced by patients with COPD. The Company’s HVT 2.0 and Precision Flow systems (together, “High Velocity Therapy systems”), which use High Velocity Therapy technology, are clinically validated alternatives to, and address many limitations of, the current standard of care for the treatment of respiratory distress in a hospital setting. The Company’s next generation High Velocity Therapy system, known as HVT 2.0, received initial 510k clearance from the FDA in 2021, transitioned to full market release in August 2022, and received clearance for expanded respiratory distress indications in December 2022. The Company sells its High Velocity Therapy systems to hospitals through a direct sales organization in the United States, the United Kingdom, Germany, Belgium and Spain and through distributors in other select countries outside of those countries. In late 2020, the Company launched its OAM in select international markets, which can be used with most versions of the Company’s Precision Flow system and OAM capability has been built into the HVT 2.0 for future use. The OAM helps clinicians maintain a patient’s SpO2 within a target SpO2 range over a greater period of time while requiring significantly fewer manual adjustments to the equipment. Maintenance of the prescribed oxygen saturation range may reduce the health risks associated with dosing too much, or too little, oxygen, particularly in neonates. In neonates, these risks include visual or developmental impairment or death. The OAM is sold through a direct sales organization in select international markets and through distributors in select international markets. The Company is in the process of seeking FDA approval to market the OAM in the United States. In addition, the Company employs field-based clinical managers who focus on medical education and training in the effective use of its products and help facilitate increased adoption and utilization. The Company focuses on physicians, respiratory therapists and nurses who work in acute hospital settings, including emergency departments and adult, pediatric and neonatal intensive care units. The Company’s relationship with these clinicians is particularly important, as it enables the Company’s products to follow patients through the care continuum. In the fourth quarter of 2022, in conjunction with the Company’s path to profitability and annual operating planning efforts, the Company completed its exit of the Vapotherm Access standalone remote patient monitoring reporting unit, which included Vapotherm Access, formerly “HGE Healthcare Solutions, LLC,” and Pulmonary Care Innovations, PLLC d/b/a RespirCare (“RespirCare”). Effective October 31, 2022, the Company terminated its master service agreement with RespirCare, which resulted in the deconsolidation of RespirCare from the Company’s condensed consolidated financial statements (see Note 9). Issuance of Securities through a Private Placement On February 10, 2023 (the “Closing Date”), the Company issued in a private placement (the “February 2023 Private Placement”) an aggregate of 17,502,244 shares of common stock, and in the case of certain investors, in lieu of shares of common stock, pre-funded warrants to purchase an aggregate of 4,402,508 shares of common stock (the “Pre-Funded Warrants”), and, in each case, accompanying warrants to purchase an aggregate of up to 21,904,752 shares of common stock (the “Warrants”) at a purchase price of $ 1.05 per unit for aggregate gross proceeds to the Company of approximately $ 23.0 million, before deducting fees to the placement agent and other offering expenses of $ 2.1 million. The Warrants expire five years following the Closing Date, have an exercise price of $ 1.17 per share, and were immediately exercisable upon issuance. The Pre-Funded Warrants expire 30 years following the Closing Date or when exercised in full, have an exercise price of $ 0.001 per share, and were immediately exercisable upon issuance. The exercise price and number of shares of common stock issuable upon the exercise of the Warrants and the Pre-Funded Warrants will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants and the Pre-Funded Warrants agreements. The Warrants and Pre-Funded Warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the Warrants and Pre-Funded Warrants do not provide any guarantee of value or return. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). Our accounting policies are described in the “ Notes to Consolidated Financial Statements ” in our 2022 Form 10-K and are updated, as necessary, in this report. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from our audited financial statements but does not include all disclosures required by U.S. GAAP. Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company, which includes its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. Segment Information Operating segments are defined as components of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company globally manages the business within one reporting segment, Vapotherm, Inc., and two reporting units, Vapotherm and Vapotherm UK Ltd. (“Vapotherm UK”). Segment information is consistent with how the chief operating decision maker reviews the business, makes investing and resource allocation decisions and assesses operating performance. As of March 31, 2023, the majority of the Company’s long-term assets are located in the United States. Long-term assets located outside the United States totaled $ 15.2 million , including $ 10.0 million located in Mexico, at March 31, 2023. Long-term assets located outside the United States totaled $ 14.9 million , including $ 9.9 million located in Mexico, at December 31, 2022 . Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. The Company evaluates its estimates on an ongoing basis. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates relied upon in preparing these condensed consolidated financial statements include calculation of stock-based compensation, valuation of warrants, realizability of inventories, allowance for doubtful accounts and credit losses, accrued expenses, the valuation allowances against deferred income tax assets, and assessments of impairment with respect to long-lived and intangible assets, including goodwill. Actual results may differ from these estimates. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2023, and the condensed consolidated statements of comprehensive loss and stockholders’ deficit for the three months ended March 31, 2023 and 2022 and the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023 and the results of its operations for the three months ended March 31, 2023 and 2022 and the cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The results of operations for the three months ended March 31, 2023 and 2022 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period. Financial Instruments and Concentrations of Credit Risk As of March 31, 2023, the Company’s financial instruments included cash and cash equivalents, restricted cash, accounts receivable, accounts payable and debt, the carrying amounts of which approximated fair value due to their short-term nature or market interest rates. All of the Company’s cash and cash equivalents are maintained at creditworthy financial institutions. At March 31, 2023, deposits exceed the amount of any insurance provided and are exposed to credit loss. The Company extends credit to customers in the normal course of business but typically does not require collateral or any other security to support amounts due. Management performs ongoing credit evaluations of its customers. The Company recognizes an allowance for credit losses equal to its current estimate of all contractual cash flows that the Company does not expect to collect. The Company’s estimate considers relevant information about past events, current conditions, and reasonable and supportable forecasts. Provisions for the allowance for credit losses are recorded in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive loss. Supplier Risk The Company obtains some of the components and subassemblies included in its High Velocity Therapy systems and its OAM from single source suppliers. The partial or complete loss of one or more of these suppliers could cause significant production delays, an inability to meet customer demand and a substantial loss in revenue. Foreign Currency and Foreign Operations The functional currency of the Company is the currency of the primary economic environment in which the entity operates, which is the U.S. dollar. For the Company’s non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of its foreign operations into U.S. dollars are excluded from the determination of net loss and are recorded in accumulated other comprehensive loss, a separate component of stockholders’ deficit. Realized foreign currency gains or losses arising from transactions denominated in foreign currencies are recorded in other (expense) income in the condensed consolidated statements of comprehensive loss. Unrealized foreign currency gains or losses arising from transactions denominated in foreign currencies are recorded in accumulated other comprehensive (loss) income. Cash, Cash Equivalents, and Restricted Cash The Company considers all highly liquid temporary investments purchased with original maturities of 90 days or less to be cash equivalents. The Company holds restricted cash related to certificates of deposits and collateral in relation to lease agreements. As of March 31, 2023, $ 1.3 million of its $ 26.8 million of cash, cash equivalents and restricted cash balance was located outside the United States. As of December 31, 2022 , $ 1.0 million of its $ 16.8 million of cash, cash equivalents and restricted cash balance was located outside of the United States. The Company’s cash, cash equivalents and restricted cash balances are primarily held by Canadian Imperial Bank of Commerce Innovation Banking (“CIBC”). In April 2023, the Company opened an additional operating account with Bank of America to mitigate its concentration of credit risk. The following table presents the components of total cash, cash equivalents, and restricted cash as set forth in the Company’s condensed consolidated statements of cash flows: March 31, December 31, Cash and cash equivalents $ 25,713 $ 15,738 Restricted cash 1,109 1,109 Total cash, cash equivalents, and restricted cash $ 26,822 $ 16,847 Leases The Company’s operating leases primarily consist of real estate leases for office, manufacturing, research and development, and warehouse space, as well as certain vehicle and equipment leases. Accounting Standards Codification (“ASC”), Leases (“ASC 842”) requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset, subject to certain permitted accounting policy elections. Under ASC 842, the Company determines whether a contract is or contains a lease at the inception of the contract. This determination is based on whether the contract provides the Company the right to control the use of a physically distinct asset and substantially all of the capacity of an asset. Leases with an initial noncancelable term of twelve months or less that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are classified as short-term leases. The Company has elected as an accounting policy to exclude from the consolidated balance sheets the right-of-use assets and lease liabilities related to short-term leases. The Company recognizes rent expense for its operating leases on a straight-line basis over the term of the lease. Certain of the Company’s leases include options to extend or terminate the lease at its sole discretion. The Company does not consider in the measurement of right-of-use assets and lease liabilities an option to extend or terminate a lease if the Company is not reasonably certain to exercise the option. Certain of the Company’s leases include covenants that oblige the Company, at its sole expense, to repair and maintain the leased asset periodically during the lease term. The Company is not a party to any leases that contain residual value guarantees. Many of the Company’s leases include fixed and variable payments. Among other charges, variable payments related to real estate leases include real estate taxes, insurance, operating expenses, and common area maintenance, which are usually billed at actual amounts incurred proportionate to the Company’s rented square feet of the building. Variable payments related to vehicle and equipment leases relate to usage of the underlying asset, sales and use tax, and value-added tax. Variable payments that do not depend on an index or rate are expensed as incurred and are not included in the measurement of the lease liability. In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. buildings, vehicles, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). The fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated to the lease components and non-lease components based on their relative fair values. The Company elected the accounting policy to not separate lease and non-lease components for its real estate, vehicle, and equipment leases. Therefore, each lease component and the related non-lease components and non-components are accounted for together as a single component. The Company measures its lease liability for each leased asset as the present value of lease payments, as defined in ASC 842, discounted using a discount rate specific to the terms of the underlying lease. The Company’s right-of-use assets are equal to the related lease liabilities, adjusted for lease incentives received including tenant improvement allowances, initial direct costs incurred related to the lease, and payments made to the lessor prior to the lease commencement date. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company estimates its incremental borrowing rate for each leased asset based on the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. When impairment indicators are present, the Company evaluates the recoverability of its right-of-use assets. If the assessment indicates an impairment, the affected assets are written down to fair value (See Note 9). Product Warranty The Company provides its customers with a standard one-year warranty on its capital equipment sales. Warranty costs are accrued based on actual historical trends and estimated at the time of sale. The warranty liability is included within accrued expenses and other current liabilities in the condensed consolidated balance sheets. A roll-forward of the Company’s warranty liability from December 31, 2022 to March 31, 2023 is as follows: Balance at December 31, 2022 $ 281 Provisions for warranty obligations 59 Settlements ( 57 ) Balance at March 31, 2023 $ 283 Revenue Recognition The Company’s revenue is primarily derived from the sale of products, leases and services. Product revenue consists of capital equipment and single-use disposables that are shipped and billed to customers both domestically and internationally. The Company’s main capital equipment products are the High Velocity Therapy systems. The Company’s main disposable products are single-use disposables and nasal interfaces, or cannulas, and adaptors. Lease revenue consists of two components which include capital equipment that the Company leases to its customers and, in certain situations, an allocation from disposable revenue to other lease revenue upon the sale of disposable products in bundled arrangements involving the placement of the High Velocity Therapy capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products. Service revenue consists of fees associated with routine service of capital units and the sale of extended service contracts and preventative maintenance plans, which are purchased by a small portion of the Company’s customer base. In addition, the Company sells small quantities of component parts in the United States, United Kingdom, and to third-party international service centers who provide service on the High Velocity Therapy capital units outside of the United States and United Kingdom. Freight revenue is based upon actual freight costs plus a percentage markup of such costs associated with the shipment of products domestically, and to a lesser extent, internationally, and is included in service revenue. Rebates and fees consist of contractually obligated administrative fees and percentage-of-sales rebates paid to Group Purchasing Organizations (“GPOs”), Integrated Delivery Networks (“IDNs”) and distributor partners and are accounted for as a reduction to the corresponding of revenue category. During the three months ended March 31, 2022, service revenue also included fees from the standalone remote patient monitoring services sold through Vapotherm Access. Under the Financial Accounting Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and assesses whether each promised good or service is distinct and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value-added, and other taxes collected on behalf of third parties are excluded from revenue. The Company’s standard payment terms are generally 30 days from the date of sale. Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative stand-alone selling prices of the promised products or services underlying each performance obligation. The Company determines stand-alone selling prices based on the price at which the performance obligation is sold separately. If the stand-alone selling price is not observable through past transactions, the Company estimates the stand-alone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is generally recognized when the customer obtains control of the Company’s product, which generally occurs at a point in time upon shipment based on the contractual shipping terms of a contract. Product and service revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value amount method to which the Company expects to be entitled. As such, revenue on sales is recorded net of prompt pay discounts and payments made to GPOs, IDNs and distributors. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Determination of whether to include estimated amounts in the transaction price is based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company believes that the estimates it has established are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in different estimates. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying a practical expedient under ASC 606, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component during the three months ended March 31, 2023 or 2022. The Company’s contracts with its customers generally have a duration of less than one year. Therefore, the Company has elected to apply a practical expedient and recognizes the incremental costs of obtaining contracts as an expense. These costs are included in sales and marketing expenses in the accompanying condensed consolidated statements of comprehensive loss. Lease Revenue The Company also enters into agreements to lease its capital equipment. For such sales, the Company accounts for revenue under ASC 842, Leases (“ASC 842”), and assesses and classifies these transactions as sales-type or operating leases based on whether the lease transfers ownership of the equipment to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term. Equipment included in arrangements including transfer of title are accounted for as sales-type leases and the Company recognizes the present value of the lease payments due over the lease term as revenue at the inception of the lease. The Company records the present value of future lease payments in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets; these amounts totaled 0.1 million and less than $ 0.1 million at March 31, 2023 and December 31, 2022 , respectively. Equipment included in arrangements that do not include the transfer of title, nor any of the sales-type or direct financing lease criteria, are accounted for as operating leases and revenue is recognized on a straight-line basis over the term of the lease. The Company also enters into agreements involving the placement of its High Velocity Therapy capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products. In these bundled arrangements, revenue recognized for the sale of the disposables is allocated between disposable revenue and other lease revenue based on the estimated relative stand-alone selling prices of the individual performance obligations. Shipping and Handling Costs Amounts billed to customers for shipping and handling are included in service revenue. Shipping and handling costs are included in costs of sales. Shipping and handling activities are accounted for as activities to fulfill a contract and are accrued when the customer obtains control of the Company’s product. The total costs of shipping and handling for the three months ended March 31, 2023 and 2022 were $ 0.3 million and $ 0.4 million , respectively. Sales and Value-Added Taxes When required by local jurisdictions, the Company bills its customers for sales tax and value-added tax calculated on each sales invoice and records a liability for the sales and value-added tax payable, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheets. Sales tax and value-added tax billed to a customer are not included in the Company’s revenue. Stock-Based Compensation The Company maintains an equity incentive plan to provide long-term incentives for employees, consultants, and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options, restricted stock, unrestricted stock, stock units, including restricted stock units and performance stock units, and stock appreciation rights to employees, consultants and non-employee directors. The Company recognizes stock-based compensation expense for awards of equity instruments to employees and non-employees based on the grant date fair value of those awards in accordance with ASC Topic 718, Stock Compensation (“ASC 718”). ASC 718 requires all equity-based compensation awards, including grants of restricted stock, restricted stock units, performance stock units and stock options, to be recognized as expense in the condensed consolidated statements of comprehensive loss based on their grant date fair values. The fair value of each option grant is estimated on the grant date using the Black-Scholes option pricing model. The fair value of restricted stock and restricted stock units is measured at the market value of the related shares of the Company’s common stock on the grant date. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period and is generally three to four years . For performance-based awards, the related compensation cost is amortized over the performance period on an accelerated attribution basis. Compensation cost associated with performance awards is based on fair value on the date of grant and the number of units expected to be earned after assessing the probability that certain performance criteria will be met and the associated targeted payout level that is forecasted will be achieved. Cumulative adjustments are recorded each quarter to reflect estimated outcomes of the performance-related conditions until the results are determined and settled. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs, including the expected life (weighted average period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock and an assumed risk-free interest rate. Expected volatility is based on the historical volatility of the Company’s common stock. The expected life is estimated using the historical life of options issued under the Company’s equity plan. The risk-free interest rate is based on U.S. Treasury rates with a remaining term that approximates the expected life assumed at the date of grant. No dividend yield is assumed as the Company does not pay, and does not expect to pay, dividends on its common stock. The Company estimates forfeitures based on historical experience with pre-vested forfeitures. To the extent actual forfeitures differ from the estimate, the difference is recorded to compensation expense in the period of the forfeiture. The Company recognizes stock-based compensation expense for shares of its common stock issued pursuant to the Vapotherm, Inc. 2018 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the related offering period. The Company estimates the fair value of shares to be issued under the ESPP based on a combination of options valued using the Black-Scholes option pricing model. The expected life is determined based on the contractual term. Dividend yield, risk-free interest rate, forfeiture rates, and expected volatility are estimated in a manner similar to option grants described above. Income Tax The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the condensed consolidated financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the condensed consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. The Company’s major tax jurisdictions are the state of New Hampshire, the United States, United Kingdom, Germany, Mexico, and Singapore. The provision for income taxes for the three months ended March 31, 2023 totaled less than $ 0.1 million and related to income earned by the Company’s foreign subsidiaries after accounting for transfer pricing adjustments. The provision for income taxes for the three months ended March 31, 2022 totaled $ 0.1 million and related to deferred tax liabilities for differences in the book and tax basis of indefinite-lived assets, partially offset by a benefit for net deferred income tax assets deemed more likely than not to be realized by the Company’s foreign subsidiaries. Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss and tax credit carryforwards that can be utilized to offset future taxable income and reduce taxes, respectively. The Company has not currently completed an evaluation of ownership changes through December 31, 2022 to assess whether utilization of the Company’s net operating loss and tax credit carryforwards would be subject to an annual limitation under Sections 382 and 383 of the Code. To the extent an ownership change is determined to have occurred under Sections 382 and 383 of the Code, the net operating loss and tax credit carryforwards may be subject to limitation. Recently Adopted Accounting Pronouncements Credit Losses (Topic 326) In June 2016, the FASB issued ASU No. 2016-13 , Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Subsequent to the issuance of ASU 2016-13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326) generally requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used and establishes additional disclosures related to credit risks. The Company adopted this guidance using the modified retrospective method in the first quarter of fiscal year 2023 . The adoption did not have a material impact on the Company’s condensed consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements In accordance with ASC 820, Fair Value Measurements and Disclosures, the Company generally defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements), and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 – unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. As of March 31, 2023, the Company had two items, cash equivalents and an embedded derivative, measured at fair value on a recurring basis. The Company’s cash equivalents primarily consist of money market deposits which totaled approximately $ 13.6 million at March 31, 2023 and are valued based on Level 1 of the fair value hierarchy. The Company’s embedded derivative relates to the Company’s financing arrangement (see Note 7). Its fair value is deemed to be immaterial at March 31, 2023 and is valued based on Level 3 of the fair value hierarchy. There were no transfers in or out of Level 1, 2 or 3 during the three months ended March 31, 2023. During the first quarter of 2023, the Company granted SLR warrants to purchase 108,377 shares of common stock (the “SLR PIK Warrants”). The issuance of the PIK Warrants were made in connection with an amendment to the Company’s financing arrangement (see Note 7). These equity-classified PIK Warrants were valued using the Black-Scholes pricing model, which falls within Level 3 of the fair value hierarchy. During the first quarter of 2022, the Company granted warrants to purchase 107,373 shares of common stock in connection with its financing arrangement (See Note 7). These equity-classified warrants were valued using the Black-Scholes pricing model, which falls within Level 3 of the fair value hierarchy. The fair value of warrants are estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: 2023 2022 Expected dividend yield 0.0 % 0.0 % Risk free interest rate 4.0 %- 4.6 % 1.9 % Expected stock price volatility 20.8 %- 20.9 % 79.3 % Expected term (years) 2.5 10.0 |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
Accounts Receivable | 4. Accounts Receivable Accounts receivable consists of the following: March 31, December 31, United States $ 5,593 $ 6,611 International 3,061 2,718 Total accounts receivable 8,654 9,329 Less: Allowance for expected credit losses ( 251 ) ( 227 ) Accounts receivable, net of expected credit losses $ 8,403 $ 9,102 A roll-forward of the Company’s allowance for credit losses from December 31, 2022 to March 31, 2023 is as follows: Balance at December 31, 2022 $ 227 Change in provision for credit losses 49 Write-offs of uncollectible balances ( 25 ) Balance at March 31, 2023 $ 251 No individual customer accounted for 10% or more of net revenue for the three months ended March 31, 2023 or 2022 . No individual customers accounted for 10% or more of total accounts receivable at March 31, 2023 or December 31, 2022 . |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventory balances, net of reserves, consist of the following: March 31, December 31, Raw materials $ 15,081 $ 15,897 Finished goods 12,915 16,215 Component parts 503 868 Total inventories $ 28,499 $ 32,980 The Company recorded a provision for excess and obsolete inventory of $ 0.2 million for each of the three months ended March 31, 2023 and 2022 . |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: March 31, December 31, Operating lease liabilities, current portion $ 2,493 $ 2,313 Accrued payroll and employee-related costs 1,555 938 Accrued bonuses 942 2,981 Accrued taxes 918 1,322 Accrued commissions 835 727 Accrued interest 791 689 Accrued termination benefits 620 2,474 Accrued professional fees 613 621 Accrued vacation liability 547 601 Accrued inventory 316 310 Product warranty reserve 283 281 Accrued freight 130 422 Other 1,767 1,930 Total accrued expenses and other current liabilities $ 11,810 $ 15,609 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt Current Credit Facilities On February 18, 2022 (the “Effective Date”), the Company entered into a Loan and Security Agreement (the “SLR Loan Agreement”) with SLR Investment Corp. (“SLR”) which provided for a term A loan facility of $ 100.0 million (the “SLR Term A Loan Facility”) and a term B loan facility of $ 25.0 million (the “SLR Term B Loan Facility”) . The SLR Term A Loan Facility was funded to the Company on the Effective Date. In connection with this funding, the Company granted SLR warrants to purchase 107,373 shares of the Company’s common stock at an exercise price of $ 13.97 per share, which were fully vested upon issuance, are exercisable at the option of the holder, in whole or in part, and expire in February 2032. The SLR Term B Loan Facility was available to the Company upon achievement of a certain minimum revenue level as more fully described in the SLR Loan Agreement. The proceeds of the SLR Term A Loan Facility were used to repay all indebtedness under the Company’s prior loan agreement with CIBC, as described below. On August 1, 2022, the Company entered into an Amendment No. 1 to the SLR Loan Agreement (the “First Amendment,” together with the SLR Loan Agreement, as amended, the “Amended SLR Loan Agreement”) with SLR. Pursuant to the First Amendment, the Company was provided with a one-month extension of its covenant-free period through August 31, 2022. On September 30, 2022, the Company entered into an Amendment No. 2 to the SLR Loan Agreement (the “Second Amendment,” together with the Amended SLR Loan Agreement, as amended, the “Second Amended SLR Loan Agreement”), with SLR. Pursuant to the Second Amendment: • the Company’s minimum net product revenue covenant was modified for the remainder of 2022; • a minimum liquidity covenant of $ 20.0 million was added; • the London Interbank Offered Rate was replaced with the Secured Overnight Financing Rate (the “SOFR”); • the exit fee was increased from 6.95 % to 7.45 % of the aggregate principal amount of the Second Amended SLR Loan Agreement; and • the SLR Term B Loan Facility and related facility fee were eliminated. Concurrently with the closing of the Second Amendment, the Company amended and restated SLR’s warrants to purchase 107,373 shares of the Company’s common stock to reset the exercise price to $ 1.63 per share. On November 22, 2022 (the “Third Amendment Effective Date”), the Company entered into an Amendment No. 3 to the SLR Loan Agreement (the “Third Amendment,” together with the Second Amended SLR Loan Agreement, as amended, the “Third Amended SLR Loan Agreement”) with SLR. Pursuant to the Third Amendment: • the Company’s minimum net product revenue covenant was modified for 2023; • the minimum liquidity covenant was reduced to $ 5 million from $ 20 million (the “Amended Liquidity Covenant”); and • an option was added, at the Company’s sole discretion, to pay up to 8 % of the interest under the Third Amended SLR Loan Agreement in-kind (rather than solely in cash as provided for prior to the Third Amendment Effective Date) during 2023 (the “PIK Interest”), subject to payment of a fee equal to 10 % of the PIK Interest, and the issuance of additional warrants to the lenders equal to 5 % of the PIK Interest. In addition, the Third Amendment provided that if the Company raised $ 15 million of net cash equity proceeds (the “Equity Raise”) prior to July 1, 2023, the 2023 minimum revenue covenant would be waived and the Company need only demonstrate net product revenue of at least $ 25 million (measured on trailing six-month basis for the period ending September 30, 2023) for the fiscal year ending December 31, 2023. Upon satisfaction of the Equity Raise, the Company’s PIK Interest option would be reduced to up to 4 % of the interest rate under the Third Amended SLR Loan Agreement. Concurrently with the closing of the Third Amendment, the Company amended and restated SLR’s warrants to purchase 107,373 shares of the Company’s common stock to reset the exercise price to $ 0.48 per share. On February 10, 2023 (the “Fourth Amendment Effective Date”), the Company entered into an Amendment No. 4 to the SLR Loan Agreement (the “Fourth Amendment,” together with the Third Amended SLR Loan Agreement, the “Fourth Amended SLR Loan Agreement”) with SLR. The Fourth Amendment includes the option for the Company to pay up to 9 % of the interest in-kind (rather than up to 8 % as provided for prior to the Fourth Amendment Effective Date) during 2023. Under the Fourth Amendment, the PIK Interest option is reduced to 4 % of the interest if the Company raises $ 25 million of net cash equity proceeds prior to July 1, 2023 and is further reduced to 0 % of the interest if the Company raises $ 30 million of net cash equity proceeds prior to January 1, 2024. Additionally, if the Company elects PIK Interest of 9 %, the amount of warrants to be granted to SLR increases to be 5 % times the amount of PIK Interest for the first 4 % of the PIK Interest selected and 12.20 % times on the next 5 % of the amount of PIK Interest selected to provide for a weighted average of 9 %, and the Company’s monthly interest expense increases by 1 % for the month in which such PIK Interest is selected. The Fourth Amendment also provides for a reset of the exercise price of the warrants to be issued in connection with the Company’s election of PIK Interest, including existing PIK Warrants, equal to the lower of the Company’s closing stock price for (a) the 10-day trailing average closing price ending on the day before the interest payment date, (b) the day before the interest payment date, or (c) $ 1.17 per share. Pursuant to the Fourth Amended SLR Loan Agreement, advances under the Fourth Amended SLR Loan Agreement bear interest at a floating rate per annum equal to (a) the greater of (i) 1.00 % or (ii) the one-month SOFR, plus (b) (i) 8.30 % under a PIK Interest option of 4 % or 0 %, or (ii) 9.30 % under a PIK Interest option of 9 %. At March 31, 2023, the interest rate was 14.06 % . The Company paid interest in-kind totaling $ 2.1 million during the three months ended March 31, 2023. The outstanding balance under the Fourth Amended SLR Loan Agreement was $ 102.1 million at March 31, 2023 . The Fourth Amended SLR Loan Agreement provides for interest-only payments for the first 48 months following the Effective Date. Thereafter, principal payments on the Fourth Amended SLR Loan Agreement are due monthly in 12 equal installments; provided that the Company has the option to extend the interest-only period for an additional 12 months upon achievement of a certain minimum revenue level as more fully described in the Fourth Amended SLR Loan Agreement. The Fourth Amended SLR Loan Agreement will mature on February 1, 2027 (the “Maturity Date”). The Fourth Amended SLR Loan Agreement may be prepaid in full, subject to a prepayment charge of (i) 2.0 %, if such prepayment occurs after February 18, 2023 but on or prior to February 17, 2024, and (ii) 1.0 %, if such prepayment occurs after February 18, 2024 but on or prior to the Maturity Date (the “Prepayment Penalty”). In addition to the payment of principal and accrued interest, the Company will be required to make a payment of 7.45 % of the aggregate principal amount of the Fourth Amended SLR Loan Agreement funded (the “Facility Exit Fee”), which is payable on the earliest to occur of (i) the Maturity Date, (ii) the acceleration of the Fourth Amended SLR Loan Agreement prior to the Maturity Date, and (iii) the prepayment date of the Fourth Amended SLR Loan Agreement prior to the Maturity Date. The Facility Exit Fee of $ 7.5 million is considered fully earned by SLR as of the Effective Date and is being accrued to interest expense over the term of the Fourth Amended SLR Loan Agreement. In connection with the Fourth Amended SLR Loan Agreement, the Company has incurred direct financing costs related to fees and non-cash consideration paid to SLR and fees paid to third parties of $ 2.1 million and $ 1.6 million, respectively, as of March 31, 2023. The Fourth Amended SLR Loan Agreement is secured by a lien on substantially all of the assets, including intellectual property, of the Company. The Fourth Amended SLR Loan Agreement contains customary covenants and representations, including, without limitation, a minimum revenue covenant equal to a percentage of each month’s forecasted net product revenue as defined in the Fourth Amended SLR Loan Agreement (tested on a trailing six month basis at the end of each fiscal month, commencing with the six month period ending on August 31, 2022), the Amended Liquidity Covenant, and other financial covenants, reporting obligations, and limitations on dispositions, changes in business or ownership, mergers or acquisitions, indebtedness, encumbrances, distributions and investments, transactions with affiliates and capital expenditures. As of March 31, 2023, the Company was in compliance with all financial covenants under the Fourth Amended SLR Loan Agreement. The events of default under the Fourth Amended SLR Loan Agreement include, without limitation, and subject to customary grace periods, (1) the Company’s failure to make any payments of principal or interest under the Fourth Amended SLR Loan Agreement or any other loan documents, (2) the Company’s breach or default in the performance of any covenant under the Fourth Amended SLR Loan Agreement, (3) the occurrence of a material adverse effect or an event that is reasonably likely to result in a material adverse effect, (4) the existence of an attachment or levy on a material portion of the Company’s funds or of the Company’s subsidiaries, (5) the Company’s insolvency or bankruptcy, or (6) the occurrence of certain material defaults with respect to any other of our indebtedness in excess of $ 500,000 . If an event of default occurs, SLR is entitled to take enforcement action, including an incremental 5 % interest rate increase or acceleration of amounts due under the Fourth Amended SLR Loan Agreement (the “Mandatory Prepayment Option”). The Company determined the Mandatory Prepayment Option to be an embedded derivative that is required to be bifurcated from the Fourth Amended SLR Loan Agreement. The Company determined the combined probability of an event of default and SLR exercising the Mandatory Prepayment Option to be remote and deemed its fair value to be immaterial as of March 31, 2023 . The Company re-evaluates the fair value of the Mandatory Prepayment Option at the end of each reporting period. The Fourth Amended SLR Loan Agreement also contains other customary provisions, such as expense reimbursement and confidentiality. SLR has indemnification rights and the right to assign the Fourth Amended SLR Loan Agreement, subject to customary restrictions. The annual principal maturities of the Company’s Fourth Amended SLR Loan Agreement as of March 31, 2023 are as follows: 2023 (remaining 9 months) $ - 2024 - 2025 - 2026 85,077 2027 17,015 Less: Unamortized deferred financing costs ( 2,822 ) Long-term loans payable $ 99,270 On April 17, 2023, the Company entered into an Amendment No. 5 to the SLR Loan Agreement (the “Fifth Amendment”) with SLR (see Note 15). Prior Credit Facilities On February 18, 2022, the Company used $ 47.4 million of the SLR Term A Loan Facility to pay off all obligations owing under, and to terminate, its prior Loan and Security Agreement (the “CIBC Loan Agreement”) with CIBC which provided for a revolving loan facility of $ 12.0 million and a term loan facility of $ 40.0 million. As a result of the termination of the CIBC Loan Agreement, the Company recorded a loss on extinguishment of debt of $ 1.1 million, which included the prepayment penalty, write-off of the remaining unamortized deferred financing costs, and legal fees during the three months ended March 31, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Lease Commitments The Company’s operating lease commitments as of December 31, 2022 are described in Note 11 of the notes to the financial statements included in the 2022 Form 10-K. The following table presents operating lease cost and information related to operating lease liabilities for the periods indicated: Three Months Ended March 31, 2023 2022 Operating lease cost $ 568 $ 683 Variable lease cost 103 115 Total $ 671 $ 798 Operating cash flow impacts: Cash paid for amounts included in measurement of lease $ 766 $ 612 Operating right of use assets obtained in exchange for new $ - $ 1,254 Weighted average remaining lease term - operating leases 4.0 3.4 Weighted average discount rate - operating leases 9.2 % 8.1 % As of March 31, 2023, future maturities of lease liabilities under the Company’s noncancelable operating leases are as follows: Total Due 2023 (remaining 9 months) $ 2,268 2024 3,240 2025 1,300 2026 812 2027 527 Thereafter 1,145 Total payments 9,292 Less interest ( 1,582 ) Total present value of lease payments $ 7,710 Legal Matters From time to time, the Company may become involved in various legal proceedings, including those that may arise in the ordinary course of business. The Company believes there is no litigation pending that could have, individually, or in the aggregate, a material adverse effect on the results of its operations or financial condition. Guarantees During the second quarter of 2022, in connection with the Company’s plan to move substantially all of its manufacturing operations from New Hampshire to Mexico, the Company entered into an agreement with TACNA Services, Inc. (“TACNA”) under which TACNA manages the Company’s manufacturing operations in Mexico. In furtherance thereof, Baja Fur, S.A. de C.V. (the “Lessee”), a subsidiary of TACNA, entered into a lease agreement (the “Lease”) with Fraccionadora Residencial Hacienda Agua Caliente, S. de R.L. de C.V. (the “Lessor”), whereby the Lessee agreed to lease property in Tijuana, México to be used as the Company’s manufacturing facility in Mexico. Under Mexican law, the Lease became a legally binding agreement on July 8, 2022. As an inducement to the Lessee and Lessor to enter into the Lease, the Company entered into an absolute unconditional corporate guaranty agreement (the “Guaranty Agreement”) pursuant to which the Company agreed to guaranty the prompt and complete payment and performance when due, whether by acceleration or otherwise, of all obligations, liabilities and covenants of the Lessee to the Lessor pursuant to the Lease, including all amounts due under the Lease. The Guaranty Agreement will terminate once all obligations arising under the Lease have been satisfied in full and the Lease has been terminated or fully performed. The total obligation outstanding under the Guaranty Agreement was $ 1.5 million as of March 31, 2023 and was recorded as an operating lease liability in these condensed consolidated financial statements. Other Commitments As of March 31, 2023, the Company has non-cancellable purchase commitments for inventories, capital equipment and services as follows: Total Due 2023 (remaining 9 months) $ 11,931 2024 2,650 2025 600 $ 15,181 |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | 9. Restructuring On April 27, 2022 , the Company committed to a plan (the “April 2022 Restructuring”) to relocate substantially all of its manufacturing operations from Exeter, New Hampshire to a company operated manufacturing facility in Tijuana, Mexico and announced a reduction in force at the Exeter, New Hampshire facility that eliminated positions related to production, quality and operations services. As part of the April 2022 Restructuring, the Company also incurred severance related expenses due to senior level personnel retirements and transitions. For the three months ended March 31, 2023 , the Company incurred restructuring expenses of approximately $ 0.2 million related to impairments of right-of-use assets, as further discussed below, and termination benefits including severance, benefits and other payroll-related charges. The termination benefits are classified in the Company’s condensed consolidated statements of comprehensive loss in the manner in which the employees’ salaries and related costs were classified. The Company does not expect to incur additional costs associated with the April 2022 Restructuring. In connection with the April 2022 Restructuring and the relocation of manufacturing operations to Mexico, in December 2022, the Company vacated most of its leased space in its Exeter, New Hampshire facility and is in the process of marketing the designated space (“Domain Sublease”) for a sublease or subleases through the remaining term of the operating lease. The Company has not yet secured a sublease tenant or tenants, which triggered an interim impairment assessment during the three months ended March 31, 2023 . The Company re-evaluated its sublease assumptions and timeline based on current market conditions and determined the carrying value of the asset group was not recoverable based on the excess of the carrying value of the asset group over the undiscounted future cash flows. The decrease in the undiscounted future cash flows from the asset group was due to a delayed timeline for securing a sublease tenant or tenants. As a result, the Company recognized an impairment charge of $ 0.2 million for the Domain Sublease asset group, to write down the operating lease right-of-use assets to their estimated fair value during the three months ended March 31, 2023. The fair value of the operating lease right-of-use assets were estimated using discounted cash flows under the income approach, which the Company considers to be a Level 3 measurement. In late August 2022, in conjunction with the Company’s path to profitability and annual operating planning efforts, the Company committed to a plan (the “August 2022 Restructuring”) to exit the Vapotherm Access standalone remote patient monitoring business and its pulmonology practice, RespirCare, and to restructure its commercial organization in the United States. As a result of the August 2022 Restructuring, the Company eliminated positions related to patient care, marketing and administrative services at Vapotherm Access and RespirCare and executed a reduction in force of the Company’s United States field teams. As part of the August 2022 Restructuring, the Company also incurred severance related expenses due to personnel transitions. For the three months ended March 31, 2023 , the Company incurred restructuring expenses of approximately $ 0.3 million, related to impairments of right-of-use assets, as further discussed below, and termination benefits including severance, benefits and other payroll-related charges. The termination benefits are classified in the Company’s condensed consolidated statements of comprehensive loss in the manner in which the employees’ salaries and related costs were classified. The Company does not expect to incur additional costs associated with the August 2022 Restructuring. In connection with the August 2022 Restructuring, in August 2022, the Company vacated Vapotherm Access’ leased space in Fort Washington, Pennsylvania. In the first quarter of 2023, the Company determined that the operating lease right-of-use asset is considered abandoned due to failed attempts to market the facility for a sublease and the Company no longer expects to sublease the facility through the remaining lease term. As a result, the Company recognized an impairment charge of $ 0.2 million for asset group, to write off the operating lease right-of-use asset to its estimated fair value during the three months ended March 31, 2023. The fair value of the operating lease right-of-use asset was estimated using discounted cash flows under the income approach, which the Company considers to be a Level 3 measurement. The following table summarizes the restructuring activity from December 31, 2022 to March 31, 2023: Termination Benefits Asset Impairments Total Balance at December 31, 2022 $ 2,474 $ - $ 2,474 April 2022 Restructuring costs incurred 24 180 204 August 2022 Restructuring costs incurred 32 252 284 Non-cash restructuring costs - ( 432 ) ( 432 ) Restructuring costs paid ( 1,914 ) - ( 1,914 ) Balance at March 31, 2023 $ 616 $ - $ 616 The restructuring accrual at March 31, 2023 is expected to be paid by the end of 2023. The following table summarizes the classification of restructuring expense, including related impairment of right-of-use assets, in the condensed consolidated statements of comprehensive loss: Three Cost of revenue $ 56 Research and development - Sales and marketing - General and administrative - Impairment of right-of-use assets 432 Total restructuring expense $ 488 There were no restructuring charges or impairments of right-of-use assets recorded during the three months ended March 31, 2022 . |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2023 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | 10. Warrants The Company’s warrant activity is summarized as follows: Common Stock Warrants Number of Weighted Outstanding at December 31, 2022 124,514 $ 2.34 Warrants granted 26,415,637 0.98 Outstanding at March 31, 2023 26,540,151 $ 0.97 The Company’s outstanding warrants at March 31, 2023 have exercise prices ranging from $ 0.48 per share to $ 14.00 per share and expire at periods ranging from June 10, 2024 through February 10, 2053 . In connection with its PIK Interest option, the Company has granted SLR the PIK Warrants to purchase an aggregate of 108,377 shares of common stock during the three months ended March 31, 2023 . The PIK Warrants had a weighted average exercise price of $ 1.23 per share on the date of grant, were fully vested upon issuance, are exercisable at the option of the holder, in whole or in part, and have expiration dates ranging from January 3, 2033 through March 1, 2033 . In connection with its February 2023 Private Placement, the Company issued the Pre-Funded Warrants to purchase an aggregate of 4,402,508 shares of common stock and accompanying Warrants to purchase an aggregate of 21,904,752 shares of common stock. The Pre-Funded Warrants and Warrants were fully vested upon issuance, are exercisable at the option of the holder, in whole or in part, and expire on February 10, 2053 and February 10, 2028 , respectively (see Note 1). |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 11. Revenue Disaggregated Revenue The following table shows the Company’s net revenue disaggregated into categories the Company considers meaningful: Three Months Ended March 31, 2023 US International Total Net revenue by: Product revenue Capital equipment $ 2,498 $ 810 $ 3,308 Disposable 9,348 3,069 12,417 Subtotal product revenue 11,846 3,879 15,725 Lease revenue Capital equipment 38 92 130 Other 355 108 463 Service and other revenue 775 638 1,413 Total net revenue $ 13,014 $ 4,717 $ 17,731 Three Months Ended March 31, 2022 US International Total Net revenue by: Product revenue Capital equipment $ 2,374 $ 784 $ 3,158 Disposable 11,071 3,808 14,879 Subtotal product revenue 13,445 4,592 18,037 Lease revenue Capital equipment 238 163 401 Other 393 98 491 Service and other revenue 2,423 270 2,693 Total net revenue $ 16,499 $ 5,123 $ 21,622 United States and International net revenue is based on the customer location to which the product is shipped. No individual foreign country represents more than 10 % of the Company’s total net revenue for the three months ended March 31, 2023 or 2022. Contract Balances from Contracts with Customers Contract liabilities consist of deferred revenue and other contract liabilities associated with rebates and fees payable to GPOs, IDNs and distributor partners. Deferred revenues are included in contract liabilities in the accompanying condensed consolidated balance sheets. The following table presents changes in contract liabilities during the three months ended March 31, 2023: Deferred Other Contract Balance at December 31, 2022 $ 1,021 $ 195 Additions 366 141 Subtractions ( 332 ) ( 194 ) Balance at March 31, 2023 $ 1,055 $ 142 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 12. Stock-Based Compensation As of March 31, 2023, 187,389 shares of common stock remained available for issuance under the Vapotherm, Inc. 2018 Equity Incentive Plan (as amended and restated, the “2018 Equity Plan”), assuming target performance under outstanding performance stock units. To date, stock options, performance awards, restricted stock awards, restricted stock units and performance stock units have been granted under the 2018 Equity Plan. Stock-based compensation expense was allocated based on the employees’ and non-employees’ functions as follows: Three Months Ended 2023 2022 Cost of revenue $ 47 $ 228 Research and development 596 488 Sales and marketing 1,114 1,079 General and administrative 1,063 1,651 Total $ 2,820 $ 3,446 Stock Options The Company granted options to purchase an aggregate of 848,575 shares of common stock at exercise prices ranging from $ 1.21 to $ 2.70 per share, with a weighted average exercise price of $ 2.65 per share, during the three months ended March 31, 2023. The Company granted options to purchase an aggregate of 241,250 shares of common stock at exercise prices ranging from $ 13.22 to $ 20.71 per share, with a weighted average exercise price of $ 20.53 per share, during the three months ended March 31, 2022. The weighted average fair value of stock options granted during the three months ended March 31, 2023 and 2022 was $ 2.18 and $ 14.18 per share, respectively. The weighted average assumptions used in the Black-Scholes options pricing model are as follows: Three Months Ended March 31, 2023 2022 Expected dividend yield 0.0 % 0.0 % Risk free interest rate 3.9 % 1.4 % Expected stock price volatility 103.8 % 80.3 % Expected term (years) 6.1 6.1 Restricted Stock Units A summary of restricted stock unit activity for the three months ended March 31, 2023 is as follows: Weighted Average Grant Date Shares Fair Value Unvested at December 31, 2022 1,320,306 $ 10.78 Granted 167,793 2.30 Vested ( 197,419 ) 19.48 Canceled ( 20,070 ) 10.01 Unvested at March 31, 2023 1,270,610 $ 8.32 Performance Stock Units The Company has granted performance stock units. The quantity of shares that will ultimately vest and be issued upon settlement of the performance stock units range from 0 % to 200 % of a targeted number of shares and will be determined based on, and subject to, individual grant milestones. A summary of performance stock units activity, assuming target level of performance, for the three months ended March 31, 2023 is as follows: Weighted Average Grant Date Shares Fair Value Unvested at December 31, 2022 177,698 $ 18.78 Granted - - Vested - - Canceled - - Unvested at March 31, 2023 177,698 $ 18.78 Employee Stock Purchase Plan As of March 31, 2023, 1,111,850 shares of common stock remained available for issuance under the ESPP. The ESPP provides for successive discrete offering periods of approximately six months or as determined by the plan administrator. The offering periods begin on each January 1 st and July 1 st or the first trading day thereafter. The ESPP permits eligible employees to elect to purchase shares of common stock through fixed whole percentage contributions from eligible compensation during each offering period, not to exceed 10 % of the eligible compensation a participant receives during an offering period and not to accrue at a rate which exceeds $ 25,000 of the fair value of the stock (determined on the grant date(s)) for each calendar year. A participant may purchase the lower of (a) a number of shares of common stock determined by dividing such participant’s accumulated payroll deductions on the exercise date by the option price, (b) 5,000 shares, or (c) such other lesser maximum number of shares as shall have been established by the plan administrator. Amounts deducted and accumulated by the participant will be used to purchase shares of common stock at the end of each offering period. The purchase price of the shares will be 85 % of the lower of the fair value of common stock on the first trading day of each offering period or on the purchase date. Participants may end their participation during an offering period up to ten days in advance of the exercise date and will be paid their accumulated contributions that have not been used to purchase shares of common stock. Participation ends automatically upon termination of employment. The fair value of the purchase right for the ESPP option is estimated on the date of grant using the Black-Scholes pricing model with the following assumptions during 2023: Expected dividend yield 0.0 % Risk free interest rate 4.8 % Expected stock price volatility 192.5 % Expected term (years) 0.5 |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 13. Net Loss Per Share As of March 31, 2023, the Pre-Funded Warrants to purchase 4,402,508 shares of common stock that were issued in connection with the February 2023 Private Placement were included in the basic and diluted net loss per share calculation (see Note 1). The Company excluded the following potential shares of common stock, based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: As of March 31, 2023 2022 Warrants to purchase common stock 22,137,643 135,871 Options to purchase common stock 3,883,035 2,120,086 Unvested restricted stock units and awards and 1,448,308 987,423 Employee stock purchase plan shares 215,769 47,311 27,684,755 3,290,691 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 14. Related Party Transactions The Company recorded sales of $ 1.1 million and less than $ 0.1 million during three months ended March 31, 2023 and 2022, respectively, to an entity in which a member of the Company’s board of directors holds a management position. There was an outstanding balance due from that entity of $ 0.8 million at March 31, 2023. There were no outstanding balances due from that entity at December 31, 2022. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events On April 17, 2023, the Company entered into the Fifth Amendment with SLR to exclude the Company’s Singapore subsidiary operating account from the requirement of a control agreement in favor of SLR, provided the account balance is the lower of (i) $ 250,000 or (ii) the amount required to fund expenditures therefrom within the next ten business days. The Fifth Amendment also contains other customary provisions, such as expense reimbursement. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). Our accounting policies are described in the “ Notes to Consolidated Financial Statements ” in our 2022 Form 10-K and are updated, as necessary, in this report. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from our audited financial statements but does not include all disclosures required by U.S. GAAP. |
Principles of Consolidation | Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company, which includes its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company globally manages the business within one reporting segment, Vapotherm, Inc., and two reporting units, Vapotherm and Vapotherm UK Ltd. (“Vapotherm UK”). Segment information is consistent with how the chief operating decision maker reviews the business, makes investing and resource allocation decisions and assesses operating performance. As of March 31, 2023, the majority of the Company’s long-term assets are located in the United States. Long-term assets located outside the United States totaled $ 15.2 million , including $ 10.0 million located in Mexico, at March 31, 2023. Long-term assets located outside the United States totaled $ 14.9 million , including $ 9.9 million located in Mexico, at December 31, 2022 . |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. The Company evaluates its estimates on an ongoing basis. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates relied upon in preparing these condensed consolidated financial statements include calculation of stock-based compensation, valuation of warrants, realizability of inventories, allowance for doubtful accounts and credit losses, accrued expenses, the valuation allowances against deferred income tax assets, and assessments of impairment with respect to long-lived and intangible assets, including goodwill. Actual results may differ from these estimates. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2023, and the condensed consolidated statements of comprehensive loss and stockholders’ deficit for the three months ended March 31, 2023 and 2022 and the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023 and the results of its operations for the three months ended March 31, 2023 and 2022 and the cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The results of operations for the three months ended March 31, 2023 and 2022 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period. |
Financial Instruments and Concentrations of Credit Risk | Financial Instruments and Concentrations of Credit Risk As of March 31, 2023, the Company’s financial instruments included cash and cash equivalents, restricted cash, accounts receivable, accounts payable and debt, the carrying amounts of which approximated fair value due to their short-term nature or market interest rates. All of the Company’s cash and cash equivalents are maintained at creditworthy financial institutions. At March 31, 2023, deposits exceed the amount of any insurance provided and are exposed to credit loss. The Company extends credit to customers in the normal course of business but typically does not require collateral or any other security to support amounts due. Management performs ongoing credit evaluations of its customers. The Company recognizes an allowance for credit losses equal to its current estimate of all contractual cash flows that the Company does not expect to collect. The Company’s estimate considers relevant information about past events, current conditions, and reasonable and supportable forecasts. Provisions for the allowance for credit losses are recorded in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive loss. |
Supplier Risk | Supplier Risk The Company obtains some of the components and subassemblies included in its High Velocity Therapy systems and its OAM from single source suppliers. The partial or complete loss of one or more of these suppliers could cause significant production delays, an inability to meet customer demand and a substantial loss in revenue. |
Foreign Currency and Foreign Operations | Foreign Currency and Foreign Operations The functional currency of the Company is the currency of the primary economic environment in which the entity operates, which is the U.S. dollar. For the Company’s non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of its foreign operations into U.S. dollars are excluded from the determination of net loss and are recorded in accumulated other comprehensive loss, a separate component of stockholders’ deficit. Realized foreign currency gains or losses arising from transactions denominated in foreign currencies are recorded in other (expense) income in the condensed consolidated statements of comprehensive loss. Unrealized foreign currency gains or losses arising from transactions denominated in foreign currencies are recorded in accumulated other comprehensive (loss) income. |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash The Company considers all highly liquid temporary investments purchased with original maturities of 90 days or less to be cash equivalents. The Company holds restricted cash related to certificates of deposits and collateral in relation to lease agreements. As of March 31, 2023, $ 1.3 million of its $ 26.8 million of cash, cash equivalents and restricted cash balance was located outside the United States. As of December 31, 2022 , $ 1.0 million of its $ 16.8 million of cash, cash equivalents and restricted cash balance was located outside of the United States. The Company’s cash, cash equivalents and restricted cash balances are primarily held by Canadian Imperial Bank of Commerce Innovation Banking (“CIBC”). In April 2023, the Company opened an additional operating account with Bank of America to mitigate its concentration of credit risk. The following table presents the components of total cash, cash equivalents, and restricted cash as set forth in the Company’s condensed consolidated statements of cash flows: March 31, December 31, Cash and cash equivalents $ 25,713 $ 15,738 Restricted cash 1,109 1,109 Total cash, cash equivalents, and restricted cash $ 26,822 $ 16,847 |
Leases | Leases The Company’s operating leases primarily consist of real estate leases for office, manufacturing, research and development, and warehouse space, as well as certain vehicle and equipment leases. Accounting Standards Codification (“ASC”), Leases (“ASC 842”) requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset, subject to certain permitted accounting policy elections. Under ASC 842, the Company determines whether a contract is or contains a lease at the inception of the contract. This determination is based on whether the contract provides the Company the right to control the use of a physically distinct asset and substantially all of the capacity of an asset. Leases with an initial noncancelable term of twelve months or less that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are classified as short-term leases. The Company has elected as an accounting policy to exclude from the consolidated balance sheets the right-of-use assets and lease liabilities related to short-term leases. The Company recognizes rent expense for its operating leases on a straight-line basis over the term of the lease. Certain of the Company’s leases include options to extend or terminate the lease at its sole discretion. The Company does not consider in the measurement of right-of-use assets and lease liabilities an option to extend or terminate a lease if the Company is not reasonably certain to exercise the option. Certain of the Company’s leases include covenants that oblige the Company, at its sole expense, to repair and maintain the leased asset periodically during the lease term. The Company is not a party to any leases that contain residual value guarantees. Many of the Company’s leases include fixed and variable payments. Among other charges, variable payments related to real estate leases include real estate taxes, insurance, operating expenses, and common area maintenance, which are usually billed at actual amounts incurred proportionate to the Company’s rented square feet of the building. Variable payments related to vehicle and equipment leases relate to usage of the underlying asset, sales and use tax, and value-added tax. Variable payments that do not depend on an index or rate are expensed as incurred and are not included in the measurement of the lease liability. In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. buildings, vehicles, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). The fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated to the lease components and non-lease components based on their relative fair values. The Company elected the accounting policy to not separate lease and non-lease components for its real estate, vehicle, and equipment leases. Therefore, each lease component and the related non-lease components and non-components are accounted for together as a single component. The Company measures its lease liability for each leased asset as the present value of lease payments, as defined in ASC 842, discounted using a discount rate specific to the terms of the underlying lease. The Company’s right-of-use assets are equal to the related lease liabilities, adjusted for lease incentives received including tenant improvement allowances, initial direct costs incurred related to the lease, and payments made to the lessor prior to the lease commencement date. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company estimates its incremental borrowing rate for each leased asset based on the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. When impairment indicators are present, the Company evaluates the recoverability of its right-of-use assets. If the assessment indicates an impairment, the affected assets are written down to fair value (See Note 9). |
Product Warranty | Product Warranty The Company provides its customers with a standard one-year warranty on its capital equipment sales. Warranty costs are accrued based on actual historical trends and estimated at the time of sale. The warranty liability is included within accrued expenses and other current liabilities in the condensed consolidated balance sheets. A roll-forward of the Company’s warranty liability from December 31, 2022 to March 31, 2023 is as follows: Balance at December 31, 2022 $ 281 Provisions for warranty obligations 59 Settlements ( 57 ) Balance at March 31, 2023 $ 283 |
Revenue Recognition | Revenue Recognition The Company’s revenue is primarily derived from the sale of products, leases and services. Product revenue consists of capital equipment and single-use disposables that are shipped and billed to customers both domestically and internationally. The Company’s main capital equipment products are the High Velocity Therapy systems. The Company’s main disposable products are single-use disposables and nasal interfaces, or cannulas, and adaptors. Lease revenue consists of two components which include capital equipment that the Company leases to its customers and, in certain situations, an allocation from disposable revenue to other lease revenue upon the sale of disposable products in bundled arrangements involving the placement of the High Velocity Therapy capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products. Service revenue consists of fees associated with routine service of capital units and the sale of extended service contracts and preventative maintenance plans, which are purchased by a small portion of the Company’s customer base. In addition, the Company sells small quantities of component parts in the United States, United Kingdom, and to third-party international service centers who provide service on the High Velocity Therapy capital units outside of the United States and United Kingdom. Freight revenue is based upon actual freight costs plus a percentage markup of such costs associated with the shipment of products domestically, and to a lesser extent, internationally, and is included in service revenue. Rebates and fees consist of contractually obligated administrative fees and percentage-of-sales rebates paid to Group Purchasing Organizations (“GPOs”), Integrated Delivery Networks (“IDNs”) and distributor partners and are accounted for as a reduction to the corresponding of revenue category. During the three months ended March 31, 2022, service revenue also included fees from the standalone remote patient monitoring services sold through Vapotherm Access. Under the Financial Accounting Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and assesses whether each promised good or service is distinct and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value-added, and other taxes collected on behalf of third parties are excluded from revenue. The Company’s standard payment terms are generally 30 days from the date of sale. Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative stand-alone selling prices of the promised products or services underlying each performance obligation. The Company determines stand-alone selling prices based on the price at which the performance obligation is sold separately. If the stand-alone selling price is not observable through past transactions, the Company estimates the stand-alone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is generally recognized when the customer obtains control of the Company’s product, which generally occurs at a point in time upon shipment based on the contractual shipping terms of a contract. Product and service revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value amount method to which the Company expects to be entitled. As such, revenue on sales is recorded net of prompt pay discounts and payments made to GPOs, IDNs and distributors. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Determination of whether to include estimated amounts in the transaction price is based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company believes that the estimates it has established are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in different estimates. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying a practical expedient under ASC 606, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component during the three months ended March 31, 2023 or 2022. The Company’s contracts with its customers generally have a duration of less than one year. Therefore, the Company has elected to apply a practical expedient and recognizes the incremental costs of obtaining contracts as an expense. These costs are included in sales and marketing expenses in the accompanying condensed consolidated statements of comprehensive loss. |
Lease Revenue | Lease Revenue The Company also enters into agreements to lease its capital equipment. For such sales, the Company accounts for revenue under ASC 842, Leases (“ASC 842”), and assesses and classifies these transactions as sales-type or operating leases based on whether the lease transfers ownership of the equipment to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term. Equipment included in arrangements including transfer of title are accounted for as sales-type leases and the Company recognizes the present value of the lease payments due over the lease term as revenue at the inception of the lease. The Company records the present value of future lease payments in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets; these amounts totaled 0.1 million and less than $ 0.1 million at March 31, 2023 and December 31, 2022 , respectively. Equipment included in arrangements that do not include the transfer of title, nor any of the sales-type or direct financing lease criteria, are accounted for as operating leases and revenue is recognized on a straight-line basis over the term of the lease. The Company also enters into agreements involving the placement of its High Velocity Therapy capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products. In these bundled arrangements, revenue recognized for the sale of the disposables is allocated between disposable revenue and other lease revenue based on the estimated relative stand-alone selling prices of the individual performance obligations. |
Shipping and Handling Costs | Shipping and Handling Costs Amounts billed to customers for shipping and handling are included in service revenue. Shipping and handling costs are included in costs of sales. Shipping and handling activities are accounted for as activities to fulfill a contract and are accrued when the customer obtains control of the Company’s product. The total costs of shipping and handling for the three months ended March 31, 2023 and 2022 were $ 0.3 million and $ 0.4 million , respectively. |
Sales and Value-Added Taxes | Sales and Value-Added Taxes When required by local jurisdictions, the Company bills its customers for sales tax and value-added tax calculated on each sales invoice and records a liability for the sales and value-added tax payable, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheets. Sales tax and value-added tax billed to a customer are not included in the Company’s revenue. |
Stock-Based Compensation | Stock-Based Compensation The Company maintains an equity incentive plan to provide long-term incentives for employees, consultants, and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options, restricted stock, unrestricted stock, stock units, including restricted stock units and performance stock units, and stock appreciation rights to employees, consultants and non-employee directors. The Company recognizes stock-based compensation expense for awards of equity instruments to employees and non-employees based on the grant date fair value of those awards in accordance with ASC Topic 718, Stock Compensation (“ASC 718”). ASC 718 requires all equity-based compensation awards, including grants of restricted stock, restricted stock units, performance stock units and stock options, to be recognized as expense in the condensed consolidated statements of comprehensive loss based on their grant date fair values. The fair value of each option grant is estimated on the grant date using the Black-Scholes option pricing model. The fair value of restricted stock and restricted stock units is measured at the market value of the related shares of the Company’s common stock on the grant date. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period and is generally three to four years . For performance-based awards, the related compensation cost is amortized over the performance period on an accelerated attribution basis. Compensation cost associated with performance awards is based on fair value on the date of grant and the number of units expected to be earned after assessing the probability that certain performance criteria will be met and the associated targeted payout level that is forecasted will be achieved. Cumulative adjustments are recorded each quarter to reflect estimated outcomes of the performance-related conditions until the results are determined and settled. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs, including the expected life (weighted average period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock and an assumed risk-free interest rate. Expected volatility is based on the historical volatility of the Company’s common stock. The expected life is estimated using the historical life of options issued under the Company’s equity plan. The risk-free interest rate is based on U.S. Treasury rates with a remaining term that approximates the expected life assumed at the date of grant. No dividend yield is assumed as the Company does not pay, and does not expect to pay, dividends on its common stock. The Company estimates forfeitures based on historical experience with pre-vested forfeitures. To the extent actual forfeitures differ from the estimate, the difference is recorded to compensation expense in the period of the forfeiture. The Company recognizes stock-based compensation expense for shares of its common stock issued pursuant to the Vapotherm, Inc. 2018 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the related offering period. The Company estimates the fair value of shares to be issued under the ESPP based on a combination of options valued using the Black-Scholes option pricing model. The expected life is determined based on the contractual term. Dividend yield, risk-free interest rate, forfeiture rates, and expected volatility are estimated in a manner similar to option grants described above. |
Income Tax | Income Tax The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the condensed consolidated financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the condensed consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. The Company’s major tax jurisdictions are the state of New Hampshire, the United States, United Kingdom, Germany, Mexico, and Singapore. The provision for income taxes for the three months ended March 31, 2023 totaled less than $ 0.1 million and related to income earned by the Company’s foreign subsidiaries after accounting for transfer pricing adjustments. The provision for income taxes for the three months ended March 31, 2022 totaled $ 0.1 million and related to deferred tax liabilities for differences in the book and tax basis of indefinite-lived assets, partially offset by a benefit for net deferred income tax assets deemed more likely than not to be realized by the Company’s foreign subsidiaries. Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss and tax credit carryforwards that can be utilized to offset future taxable income and reduce taxes, respectively. The Company has not currently completed an evaluation of ownership changes through December 31, 2022 to assess whether utilization of the Company’s net operating loss and tax credit carryforwards would be subject to an annual limitation under Sections 382 and 383 of the Code. To the extent an ownership change is determined to have occurred under Sections 382 and 383 of the Code, the net operating loss and tax credit carryforwards may be subject to limitation. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Credit Losses (Topic 326) In June 2016, the FASB issued ASU No. 2016-13 , Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Subsequent to the issuance of ASU 2016-13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326) generally requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used and establishes additional disclosures related to credit risks. The Company adopted this guidance using the modified retrospective method in the first quarter of fiscal year 2023 . The adoption did not have a material impact on the Company’s condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Components of Cash, Cash Equivalents and Restricted Cash | The following table presents the components of total cash, cash equivalents, and restricted cash as set forth in the Company’s condensed consolidated statements of cash flows: March 31, December 31, Cash and cash equivalents $ 25,713 $ 15,738 Restricted cash 1,109 1,109 Total cash, cash equivalents, and restricted cash $ 26,822 $ 16,847 |
Summary of Roll-Forward Warranty Liability | A roll-forward of the Company’s warranty liability from December 31, 2022 to March 31, 2023 is as follows: Balance at December 31, 2022 $ 281 Provisions for warranty obligations 59 Settlements ( 57 ) Balance at March 31, 2023 $ 283 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assumptions Used in Black-Scholes Options Pricing Model at the Date of Grant | The fair value of warrants are estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: 2023 2022 Expected dividend yield 0.0 % 0.0 % Risk free interest rate 4.0 %- 4.6 % 1.9 % Expected stock price volatility 20.8 %- 20.9 % 79.3 % Expected term (years) 2.5 10.0 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
Summary of Accounts Receivable | Accounts receivable consists of the following: March 31, December 31, United States $ 5,593 $ 6,611 International 3,061 2,718 Total accounts receivable 8,654 9,329 Less: Allowance for expected credit losses ( 251 ) ( 227 ) Accounts receivable, net of expected credit losses $ 8,403 $ 9,102 |
Summary of Allowance for Credit Losses | A roll-forward of the Company’s allowance for credit losses from December 31, 2022 to March 31, 2023 is as follows: Balance at December 31, 2022 $ 227 Change in provision for credit losses 49 Write-offs of uncollectible balances ( 25 ) Balance at March 31, 2023 $ 251 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory Balances, Net of Reserves | Inventory balances, net of reserves, consist of the following: March 31, December 31, Raw materials $ 15,081 $ 15,897 Finished goods 12,915 16,215 Component parts 503 868 Total inventories $ 28,499 $ 32,980 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following: March 31, December 31, Operating lease liabilities, current portion $ 2,493 $ 2,313 Accrued payroll and employee-related costs 1,555 938 Accrued bonuses 942 2,981 Accrued taxes 918 1,322 Accrued commissions 835 727 Accrued interest 791 689 Accrued termination benefits 620 2,474 Accrued professional fees 613 621 Accrued vacation liability 547 601 Accrued inventory 316 310 Product warranty reserve 283 281 Accrued freight 130 422 Other 1,767 1,930 Total accrued expenses and other current liabilities $ 11,810 $ 15,609 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Annual Principal Maturities of Term Loans | The annual principal maturities of the Company’s Fourth Amended SLR Loan Agreement as of March 31, 2023 are as follows: 2023 (remaining 9 months) $ - 2024 - 2025 - 2026 85,077 2027 17,015 Less: Unamortized deferred financing costs ( 2,822 ) Long-term loans payable $ 99,270 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Operating Lease Cost and Information Related to Operating Lease Liabilities | The following table presents operating lease cost and information related to operating lease liabilities for the periods indicated: Three Months Ended March 31, 2023 2022 Operating lease cost $ 568 $ 683 Variable lease cost 103 115 Total $ 671 $ 798 Operating cash flow impacts: Cash paid for amounts included in measurement of lease $ 766 $ 612 Operating right of use assets obtained in exchange for new $ - $ 1,254 Weighted average remaining lease term - operating leases 4.0 3.4 Weighted average discount rate - operating leases 9.2 % 8.1 % |
Summary of Future Maturities of Lease Liabilities under Noncancelable Operating Leases | As of March 31, 2023, future maturities of lease liabilities under the Company’s noncancelable operating leases are as follows: Total Due 2023 (remaining 9 months) $ 2,268 2024 3,240 2025 1,300 2026 812 2027 527 Thereafter 1,145 Total payments 9,292 Less interest ( 1,582 ) Total present value of lease payments $ 7,710 |
Summary of Non-Cancellable Purchase Commitments | As of March 31, 2023, the Company has non-cancellable purchase commitments for inventories, capital equipment and services as follows: Total Due 2023 (remaining 9 months) $ 11,931 2024 2,650 2025 600 $ 15,181 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Activity | The following table summarizes the restructuring activity from December 31, 2022 to March 31, 2023: Termination Benefits Asset Impairments Total Balance at December 31, 2022 $ 2,474 $ - $ 2,474 April 2022 Restructuring costs incurred 24 180 204 August 2022 Restructuring costs incurred 32 252 284 Non-cash restructuring costs - ( 432 ) ( 432 ) Restructuring costs paid ( 1,914 ) - ( 1,914 ) Balance at March 31, 2023 $ 616 $ - $ 616 |
Summary of Classification of Restructuring Expense, Including Related Impairment of Right-of-use Assets | The following table summarizes the classification of restructuring expense, including related impairment of right-of-use assets, in the condensed consolidated statements of comprehensive loss: Three Cost of revenue $ 56 Research and development - Sales and marketing - General and administrative - Impairment of right-of-use assets 432 Total restructuring expense $ 488 |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Warrants and Rights Note Disclosure [Abstract] | |
Summary of Warrants Activity | The Company’s warrant activity is summarized as follows: Common Stock Warrants Number of Weighted Outstanding at December 31, 2022 124,514 $ 2.34 Warrants granted 26,415,637 0.98 Outstanding at March 31, 2023 26,540,151 $ 0.97 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Net Revenue Disaggregated into Categories | Disaggregated Revenue The following table shows the Company’s net revenue disaggregated into categories the Company considers meaningful: Three Months Ended March 31, 2023 US International Total Net revenue by: Product revenue Capital equipment $ 2,498 $ 810 $ 3,308 Disposable 9,348 3,069 12,417 Subtotal product revenue 11,846 3,879 15,725 Lease revenue Capital equipment 38 92 130 Other 355 108 463 Service and other revenue 775 638 1,413 Total net revenue $ 13,014 $ 4,717 $ 17,731 Three Months Ended March 31, 2022 US International Total Net revenue by: Product revenue Capital equipment $ 2,374 $ 784 $ 3,158 Disposable 11,071 3,808 14,879 Subtotal product revenue 13,445 4,592 18,037 Lease revenue Capital equipment 238 163 401 Other 393 98 491 Service and other revenue 2,423 270 2,693 Total net revenue $ 16,499 $ 5,123 $ 21,622 |
Schedule of Changes in Contract Liabilities | The following table presents changes in contract liabilities during the three months ended March 31, 2023: Deferred Other Contract Balance at December 31, 2022 $ 1,021 $ 195 Additions 366 141 Subtractions ( 332 ) ( 194 ) Balance at March 31, 2023 $ 1,055 $ 142 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Summary of Allocated Stock Based Compensation Expense | Stock-based compensation expense was allocated based on the employees’ and non-employees’ functions as follows: Three Months Ended 2023 2022 Cost of revenue $ 47 $ 228 Research and development 596 488 Sales and marketing 1,114 1,079 General and administrative 1,063 1,651 Total $ 2,820 $ 3,446 |
Schedule of Weighted Average Assumptions Used in Black-Scholes Options Pricing Model | The weighted average assumptions used in the Black-Scholes options pricing model are as follows: Three Months Ended March 31, 2023 2022 Expected dividend yield 0.0 % 0.0 % Risk free interest rate 3.9 % 1.4 % Expected stock price volatility 103.8 % 80.3 % Expected term (years) 6.1 6.1 |
Schedule of Fair Value of ESPP Used in Black-Scholes Options Pricing Model | The fair value of the purchase right for the ESPP option is estimated on the date of grant using the Black-Scholes pricing model with the following assumptions during 2023: Expected dividend yield 0.0 % Risk free interest rate 4.8 % Expected stock price volatility 192.5 % Expected term (years) 0.5 |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Summary of Restricted Stock Units, Restricted Stock Awards and Performance Stock Units | A summary of restricted stock unit activity for the three months ended March 31, 2023 is as follows: Weighted Average Grant Date Shares Fair Value Unvested at December 31, 2022 1,320,306 $ 10.78 Granted 167,793 2.30 Vested ( 197,419 ) 19.48 Canceled ( 20,070 ) 10.01 Unvested at March 31, 2023 1,270,610 $ 8.32 |
Performance Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Summary of Restricted Stock Units, Restricted Stock Awards and Performance Stock Units | A summary of performance stock units activity, assuming target level of performance, for the three months ended March 31, 2023 is as follows: Weighted Average Grant Date Shares Fair Value Unvested at December 31, 2022 177,698 $ 18.78 Granted - - Vested - - Canceled - - Unvested at March 31, 2023 177,698 $ 18.78 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Diluted Net Loss Per Share | The Company excluded the following potential shares of common stock, based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: As of March 31, 2023 2022 Warrants to purchase common stock 22,137,643 135,871 Options to purchase common stock 3,883,035 2,120,086 Unvested restricted stock units and awards and 1,448,308 987,423 Employee stock purchase plan shares 215,769 47,311 27,684,755 3,290,691 |
Description of Business - Addit
Description of Business - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 10, 2023 | Mar. 31, 2023 |
Pre-Funded Warrants | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Warrants to purchase share of common stock | 4,402,508 | |
Private Placement | Common Stock | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Shares issued | 17,502,244 | |
Common stock price per share | $ 1.05 | |
Proceeds from issuance of common stock | $ 23 | |
Offering expenses | $ 2.1 | |
Private Placement | Pre-Funded Warrants | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Warrants to purchase share of common stock | 4,402,508 | |
Warrant expiration year | 30 years | |
Warrants exercise price | $ 0.001 | |
Private Placement | Warrants | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Warrants to purchase share of common stock | 21,904,752 | |
Warrant expiration year | 5 years | |
Warrants exercise price | $ 1.17 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | |||
Mar. 31, 2023 USD ($) Reportingunit Segment | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of reporting segment | Segment | 1 | |||
Number of reporting units | Reportingunit | 2 | |||
Maturity period of highly liquid investments with original maturities | 90 days | |||
Cash, cash equivalents and restricted cash balance | $ 26,822,000 | $ 74,016,000 | $ 16,847,000 | $ 57,324,000 |
Standard product warranty period | 1 year | |||
Standard payment term to customer | 30 days | |||
Revenue, performance obligation, description of payment terms | When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying a practical expedient under ASC 606, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. | |||
Revenue, remaining performance obligation, amount | $ 0 | $ 0 | ||
Dividend yield assumed | 0% | 0% | ||
Provision for income taxes | $ 9,000 | $ 92,000 | ||
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 01, 2023 | |||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true | |||
Accounting Standards Update [Extensible Enumeration] | us-gaap:AccountingStandardsUpdate201613Member | |||
Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Vesting period | 3 years | |||
Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Vesting period | 4 years | |||
Provision for income taxes | $ 100,000 | |||
Shipping and Handling | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Shipping and handling costs | 300,000 | $ 400,000 | ||
Prepaid Expenses and Other Current Assets | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Current value of future lease payments | 100,000 | |||
Prepaid Expenses and Other Current Assets | Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Current value of future lease payments | 100,000 | |||
Outside U.S. | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Long-term assets | 15,200,000 | 14,900,000 | ||
Cash, cash equivalents and restricted cash balance | 1,300,000 | 1,000,000 | ||
Mexico | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Long-term assets | $ 10,000,000 | $ 9,900,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Components of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 25,713 | $ 15,738 | ||
Restricted cash | 1,109 | 1,109 | ||
Total cash, cash equivalents, and restricted cash | $ 26,822 | $ 16,847 | $ 74,016 | $ 57,324 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Roll-Forward Warranty Liability (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Accounting Policies [Abstract] | |
Balance, beginning of period | $ 281 |
Provisions for warranty obligations | 59 |
Settlements | (57) |
Balance, end of period | $ 283 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 | Feb. 18, 2022 |
Class Of Warrant Or Right [Line Items] | |||
Fair value, assets, transfers in and out of level 1, 2 or 3 | $ 0 | ||
Fair value, liabilities, transfers in and out of level 1, 2 or 3 | 0 | ||
Financing Arrangement | Common Stock Warrants | |||
Class Of Warrant Or Right [Line Items] | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 107,373 | 108,377 | |
Level 1 | Money Market Deposits | |||
Class Of Warrant Or Right [Line Items] | |||
Cash equivalents | $ 13,600,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assumptions Used in Black-Scholes Options Pricing Model at the Date of Grant (Details) | Mar. 31, 2023 | Mar. 31, 2022 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected term (years) | 2 years 6 months | 10 years |
Expected Dividend Yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 0 | 0 |
Risk Free Interest Rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 1.9 | |
Risk Free Interest Rate | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 4.6 | |
Risk Free Interest Rate | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 4 | |
Expected Stock Price Volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 79.3 | |
Expected Stock Price Volatility | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 20.9 | |
Expected Stock Price Volatility | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Key inputs used in valuation | 20.8 |
Accounts Receivable - Summary o
Accounts Receivable - Summary of Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts Notes And Loans Receivable [Line Items] | ||
Total accounts receivable | $ 8,654 | $ 9,329 |
Less: Allowance for expected credit losses | (251) | (227) |
Accounts receivable, net of expected credit losses | 8,403 | 9,102 |
United States | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Total accounts receivable | 5,593 | 6,611 |
International | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Total accounts receivable | $ 3,061 | $ 2,718 |
Accounts Receivable - Summary_2
Accounts Receivable - Summary of Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounts Notes And Loans Receivable [Line Items] | ||
Balance at December 31,2022 | $ 227 | |
Change in provision for credit losses | 49 | $ 177 |
Balance at March 31, 2023 | 251 | |
Uncollectible Balances | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Write-offs of uncollectible balances | $ (25) |
Accounts Receivable - Additiona
Accounts Receivable - Additional Information (Details) - Customer | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Net Revenue | Customer Concentration Risk | |||
Accounts Notes And Loans Receivable [Line Items] | |||
Number of customer accounted more than 10% | 0 | 0 | |
Accounts Receivable | Credit Concentration Risk | |||
Accounts Notes And Loans Receivable [Line Items] | |||
Number of customer accounted more than 10% | 0 | 0 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory Balances, Net of Reserves (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 15,081 | $ 15,897 |
Finished goods | 12,915 | 16,215 |
Component parts | 503 | 868 |
Total inventories | $ 28,499 | $ 32,980 |
Inventories - Additional Inform
Inventories - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | ||
Provision for excess and obsolete inventory | $ 0.2 | $ 0.2 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill and Intangible Assets (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Goodwill | |
Balance at December 31, 2021 | $ 536 |
Balance at September 30, 2022 | $ 549 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Acquired Finite Lived Intangible Assets [Line Items] | |||
Goodwill | $ 549,000 | $ 536,000 | |
Impairment charge related to long-lived assets, other than intangible assets | $ 432,000 | $ 0 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Operating lease liabilities, current portion | $ 2,493 | $ 2,313 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total accrued expenses and other current liabilities | Total accrued expenses and other current liabilities |
Accrued payroll and employee-related costs | $ 1,555 | $ 938 |
Accrued bonuses | 942 | 2,981 |
Accrued taxes | 918 | 1,322 |
Accrued commissions | 835 | 727 |
Accrued interest | 791 | 689 |
Accrued termination benefits | 620 | 2,474 |
Accrued professional fees | 613 | 621 |
Accrued vacation liability | 547 | 601 |
Accrued inventory | 316 | 310 |
Product warranty reserve | 283 | 281 |
Accrued freight | 130 | 422 |
Other | 1,767 | 1,930 |
Total accrued expenses and other current liabilities | $ 11,810 | $ 15,609 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 3 Months Ended | ||||||||
Dec. 31, 2023 | Jun. 30, 2023 | Feb. 10, 2023 | Nov. 22, 2022 | Sep. 30, 2022 | Sep. 29, 2022 | Feb. 18, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | $ 1,114,000 | ||||||||
SLR Investment Corporation ("SLR") | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrants to purchase share of common stock | 107,373 | 107,373 | |||||||
Warrants exercise price | $ 1.17 | $ 0.48 | $ 1.63 | ||||||
Debt instrument, covenant description | The events of default under the Fourth Amended SLR Loan Agreement include, without limitation, and subject to customary grace periods, (1) the Company’s failure to make any payments of principal or interest under the Fourth Amended SLR Loan Agreement or any other loan documents, (2) the Company’s breach or default in the performance of any covenant under the Fourth Amended SLR Loan Agreement, (3) the occurrence of a material adverse effect or an event that is reasonably likely to result in a material adverse effect, (4) the existence of an attachment or levy on a material portion of the Company’s funds or of the Company’s subsidiaries, (5) the Company’s insolvency or bankruptcy, or (6) the occurrence of certain material defaults with respect to any other of our indebtedness in excess of $500,000. If an event of default occurs, SLR is entitled to take enforcement action, including an incremental 5% interest rate increase or acceleration of amounts due under the Fourth Amended SLR Loan Agreement (the “Mandatory Prepayment Option”). The Company determined the Mandatory Prepayment Option to be an embedded derivative that is required to be bifurcated from the Fourth Amended SLR Loan Agreement. The Company determined the combined probability of an event of default and SLR exercising the Mandatory Prepayment Option to be remote and deemed its fair value to be immaterial as of March 31, 2023. The Company re-evaluates the fair value of the Mandatory Prepayment Option at the end of each reporting period. | ||||||||
Minimum amount of other indebtedness | $ 500,000 | ||||||||
Minimum liquidity covenant | $ 5,000,000 | $ 20,000,000 | |||||||
Increase in incremental interest rate | 5% | ||||||||
Facility exit fee payable, percentage on aggregate principal amount | 7.45% | 6.95% | |||||||
Percentage of paid in kind interest rate | 9% | ||||||||
Paid in kind interest percentage in fee payment | 10% | ||||||||
Paid in kind interest percentage in issuance of warrants | 5% | ||||||||
Net cash equity proceeds raise threshold | $ 15,000,000 | ||||||||
Minimum product revenue covenant | $ 25,000,000 | ||||||||
Amount paid in kind interest rate | $ 2,100,000 | ||||||||
Percentage of increase in paid in kind interest rate | 1% | ||||||||
Strike price for warrants description | The Fourth Amendment also provides for a reset of the exercise price of the warrants to be issued in connection with the Company’s election of PIK Interest, including existing PIK Warrants, equal to the lower of the Company’s closing stock price for (a) the 10-day trailing average closing price ending on the day before the interest payment date, (b) the day before the interest payment date, or (c) $1.17 per share. | ||||||||
Payment of direct financing costs | 2,100,000 | ||||||||
SLR Investment Corporation ("SLR") | Warrants | |||||||||
Debt Instrument [Line Items] | |||||||||
Increase in percentage of times warrants granted option one | 5% | ||||||||
Percentage of paid in kind interest rate option one | 4% | ||||||||
Increase in percentage of times warrants granted option two | 12.20% | ||||||||
Percentage of paid in kind interest rate option two | 5% | ||||||||
Percentage of paid in kind interest provide for weighted average | 9% | ||||||||
SLR Investment Corporation ("SLR") | Scenario Forecast | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of paid in kind interest rate reduced upon satisfaction of equity raise | 0% | 4% | |||||||
Net cash equity proceeds | $ 30,000,000 | $ 25,000,000 | |||||||
SLR Investment Corporation ("SLR") | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of paid in kind interest rate | 9% | 8% | |||||||
Percentage of paid in kind interest rate reduced upon satisfaction of equity raise | 4% | ||||||||
SLR Investment Corporation ("SLR") | SLR Term A Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding balance under loan | $ 100,000,000 | $ 102,100,000 | |||||||
Warrants to purchase share of common stock | 107,373 | ||||||||
Warrants exercise price | $ 13.97 | ||||||||
Debt instrument, interest rate | 14.06% | ||||||||
Loan agreement, payment terms | The Fourth Amended SLR Loan Agreement provides for interest-only payments for the first 48 months following the Effective Date. Thereafter, principal payments on the Fourth Amended SLR Loan Agreement are due monthly in 12 equal installments; provided that the Company has the option to extend the interest-only period for an additional 12 months upon achievement of a certain minimum revenue level as more fully described in the Fourth Amended SLR Loan Agreement. | ||||||||
Percentage of paid in kind interest rate option one | 4% | ||||||||
Percentage of paid in kind interest rate option two | 0% | ||||||||
SLR Investment Corporation ("SLR") | SLR Term A Loan Facility | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument rate | 8.30% | ||||||||
Debt instrument, interest rate | 1% | ||||||||
SLR Investment Corporation ("SLR") | SLR Term A Loan Facility | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument rate | 9.30% | ||||||||
SLR Investment Corporation ("SLR") | SLR Term B Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding balance under loan | $ 25,000,000 | ||||||||
Third Parties | |||||||||
Debt Instrument [Line Items] | |||||||||
Payment of direct financing costs | $ 1,600,000 | ||||||||
February 18, 2023 to February 17, 2024 | SLR Investment Corporation ("SLR") | SLR Term A Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of prepayment charge | 2% | ||||||||
After February 18, 2024 but on or prior to February 1, 2027 | SLR Investment Corporation ("SLR") | SLR Term A Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of prepayment charge | 1% | ||||||||
Facility Exit Fee | SLR Investment Corporation ("SLR") | |||||||||
Debt Instrument [Line Items] | |||||||||
Facility exit fee payable, percentage on aggregate principal amount | 7.45% | ||||||||
Facility exit fee | $ 7,500,000 | ||||||||
Canadian Imperial Bank of Commerce Innovation Banking | CIBC Loan Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | 1,100,000 | ||||||||
Canadian Imperial Bank of Commerce Innovation Banking | CIBC Loan Agreement | SLR Term A Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount to pay off all obligations owing and termination of agreements | 47,400,000 | ||||||||
Canadian Imperial Bank of Commerce Innovation Banking | Revolving Credit Line | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding balance under line of credit | 12,000,000 | ||||||||
Canadian Imperial Bank of Commerce Innovation Banking | Term Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding balance under line of credit | $ 40,000,000 |
Debt - Schedule of Annual Princ
Debt - Schedule of Annual Principal Maturities of Term Loans (Details) - Loans Payable - SLR Investment Corp ("SLR") $ in Thousands | Mar. 31, 2023 USD ($) |
Debt Instrument [Line Items] | |
2023 (remaining 9 months) | |
2024 | |
2025 | |
2026 | 85,077 |
2027 | 17,015 |
Less: Unamortized deferred financing costs | (2,822) |
Long-term loans payable | $ 99,270 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Loss Contingencies [Line Items] | |
Obligation outstanding under guaranty agreement | $ 1.5 |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Operating Lease Cost and Information Related to Operating Lease Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Lease cost: | ||
Operating lease cost | $ 568 | $ 683 |
Variable lease cost | 103 | 115 |
Total | 671 | 798 |
Operating cash flow impacts: | ||
Cash paid for amounts included in measurement of lease liabilities | 766 | 612 |
Operating right of use assets obtained in exchange for new operating lease liabilities | $ 0 | $ 1,254 |
Weighted average remaining lease term - operating leases (in years) | 4 years | 3 years 4 months 24 days |
Weighted average discount rate - operating leases | 9.20% | 8.10% |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Future Maturities of Lease Liabilities under Noncancelable Operating Leases (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 (remaining 9 months) | $ 2,268 |
2024 | 3,240 |
2025 | 1,300 |
2026 | 812 |
2027 | 527 |
Thereafter | 1,145 |
Total payments | 9,292 |
Less interest | (1,582) |
Total present value of lease payments | $ 7,710 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilities |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Non-Cancellable Purchase Commitments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 (remaining 9 months) | $ 11,931 |
2024 | 2,650 |
2025 | 600 |
Non cancellable purchase commitments | $ 15,181 |
Restructuring - Additional Info
Restructuring - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | $ 488,000 | $ 0 |
Impairment of right-of-use assets | $ 432,000 | $ 0 |
April 2022 Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring committed date | Apr. 27, 2022 | |
Restructuring expenses | $ 204,000 | |
April 2022 Restructuring | Domain Sublease Asset Group | ||
Restructuring Cost and Reserve [Line Items] | ||
Impairment of right-of-use assets | 200,000 | |
April 2022 Restructuring | Impairments of Right-of-use Assets and Termination Benefits including Severance, Benefits and Other Payroll-Related Charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 200,000 | |
August 2022 Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 284,000 | |
August 2022 Restructuring | Vapotherm Access Asset Group | ||
Restructuring Cost and Reserve [Line Items] | ||
Impairment of right-of-use assets | 200,000 | |
August 2022 Restructuring | Impairments of Right-of-use Assets and Termination Benefits including Severance, Benefits and Other Payroll-Related Charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | $ 300,000 |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Activity (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Balance | $ 2,474,000 | |
Restructuring costs incurred | 488,000 | $ 0 |
Non-cash restructuring costs | (432,000) | |
Restructuring costs paid | (1,914,000) | |
Balance | 616,000 | |
Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Balance | 2,474,000 | |
Non-cash restructuring costs | 0 | |
Restructuring costs paid | (1,914,000) | |
Balance | 616,000 | |
Asset Impairments | ||
Restructuring Cost and Reserve [Line Items] | ||
Balance | 0 | |
Non-cash restructuring costs | (432,000) | |
Restructuring costs paid | 0 | |
Balance | 0 | |
April 2022 Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs incurred | 204,000 | |
April 2022 Restructuring | Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs incurred | 24,000 | |
April 2022 Restructuring | Asset Impairments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs incurred | 180,000 | |
August 2022 Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs incurred | 284,000 | |
August 2022 Restructuring | Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs incurred | 32,000 | |
August 2022 Restructuring | Asset Impairments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs incurred | $ 252,000 |
Restructuring - Summary of Clas
Restructuring - Summary of Classification of Restructuring Expense, Including Related Impairment of Right-of-use Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring expense | $ 488,000 | $ 0 |
Cost of Revenue | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring expense | 56,000 | |
Research and Development | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring expense | 0 | |
Sales and Marketing | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring expense | 0 | |
General and Administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring expense | 0 | |
Impairment of Right-of-use Assets | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring expense | $ 432,000 |
Warrants - Summary of Warrants
Warrants - Summary of Warrants Activity (Details) - Common Stock Warrants | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Class of Warrant or Right [Line Items] | |
Number of shares, beginning balance | shares | 124,514 |
Number of shares, warrants granted | shares | 26,415,637 |
Number of shares, ending balance | shares | 26,540,151 |
Weighted average exercise price, beginning balance | $ / shares | $ 2.34 |
Weighted average exercise price, warrants granted | $ / shares | 0.98 |
Weighted average exercise price, ending balance | $ / shares | $ 0.97 |
Warrants - Additional Informati
Warrants - Additional Information (Details) - $ / shares | Mar. 31, 2023 | Feb. 28, 2023 | Feb. 10, 2023 | Dec. 31, 2022 |
Pre-Funded Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants to purchase share of common stock | 4,402,508 | |||
Pre-Funded Warrants | Private Placement | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants to purchase share of common stock | 4,402,508 | |||
Warrants exercise price | $ 0.001 | |||
Warrants | Private Placement | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants to purchase share of common stock | 21,904,752 | |||
Warrants exercise price | $ 1.17 | |||
Maximum | Pre-Funded Warrants | Private Placement | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and Rights Outstanding, Maturity Date | Feb. 10, 2053 | |||
Minimum | Warrants | Private Placement | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and Rights Outstanding, Maturity Date | Feb. 10, 2028 | |||
SLR Investment Corp ("SLR") | SLR Term A Loan Facility | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants to purchase share of common stock | 108,377 | |||
Warrants exercise price | $ 1.23 | |||
SLR Investment Corp ("SLR") | SLR Term A Loan Facility | Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and Rights Outstanding, Maturity Date | Jan. 03, 2033 | |||
SLR Investment Corp ("SLR") | SLR Term A Loan Facility | Minimum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and Rights Outstanding, Maturity Date | Mar. 01, 2033 | |||
Common Stock Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercise price | $ 0.97 | $ 2.34 | ||
Common Stock Warrants | Periods ranging from June 10, 2024 through February 10, 2053 | Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercise price | $ 14 | |||
Warrants and Rights Outstanding, Maturity Date | Feb. 10, 2053 | |||
Common Stock Warrants | Periods ranging from June 10, 2024 through February 10, 2053 | Minimum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercise price | $ 0.48 | |||
Warrants and Rights Outstanding, Maturity Date | Jun. 10, 2024 |
Revenue - Net Revenue Disaggreg
Revenue - Net Revenue Disaggregated into Categories (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | $ 17,731 | $ 21,622 |
US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 13,014 | 16,499 |
International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 4,717 | 5,123 |
Capital Equipment Product Revenue | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 3,308 | 3,158 |
Capital Equipment Product Revenue | US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 2,498 | 2,374 |
Capital Equipment Product Revenue | International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 810 | 784 |
Disposable Product Revenue | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 12,417 | 14,879 |
Disposable Product Revenue | US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 9,348 | 11,071 |
Disposable Product Revenue | International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 3,069 | 3,808 |
Product Revenue | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 15,725 | 18,037 |
Product Revenue | US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 11,846 | 13,445 |
Product Revenue | International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 3,879 | 4,592 |
Lease Revenue, Capital Equipment | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 130 | 401 |
Lease Revenue, Capital Equipment | US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 38 | 238 |
Lease Revenue, Capital Equipment | International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 92 | 163 |
Lease Revenue, Other | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 463 | 491 |
Lease Revenue, Other | US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 355 | 393 |
Lease Revenue, Other | International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 108 | 98 |
Service, Other | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 1,413 | 2,693 |
Service, Other | US | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | 775 | 2,423 |
Service, Other | International | ||
Disaggregation Of Revenue [Line Items] | ||
Total net revenue | $ 638 | $ 270 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenue from contract with customer excluding assessed tax | 10% | 10% |
Revenue - Schedule of Changes i
Revenue - Schedule of Changes in Contract Liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Deferred Revenue | |
Balance at December 31, 2022 | $ 1,021 |
Additions | 366 |
Subtractions | (332) |
Balance at March 31, 2023 | 1,055 |
Contract Liabilities | |
Balance at December 31, 2022 | 195 |
Additions | 141 |
Subtractions | (194) |
Balance at March 31, 2023 | $ 142 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Allocated Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Allocated stock based compensation expense | $ 2,820 | $ 3,446 |
Cost of Revenue | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Allocated stock based compensation expense | 47 | 228 |
Research and Development | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Allocated stock based compensation expense | 596 | 488 |
Sales and Marketing | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Allocated stock based compensation expense | 1,114 | 1,079 |
General and Administrative | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Allocated stock based compensation expense | $ 1,063 | $ 1,651 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Nov. 30, 2018 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options/units, granted | 848,575 | 241,250 | |
Exercise price range, lower range limit | $ 1.21 | $ 13.22 | |
Exercise price range, upper range limit | 2.70 | 20.71 | |
Weighted average exercise price | 2.65 | 20.53 | |
Weighted average grant date fair value | $ 2.18 | $ 14.18 | |
Performance stock units percentage of a targeted number of shares, minimum | 0% | ||
Performance stock units percentage of a targeted number of shares, maximum | 200% | ||
2018 Equity Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Common stock reserved for issuance | 187,389 | ||
Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Common stock reserved for issuance | 1,111,850 | ||
Maximum percentage to purchase shares of eligible compensation a participant receives during each offering period | 10% | ||
Maximum amount of shares a participant can accrue at discounted rate of the fair market value. | $ 25,000 | ||
Maximum number of shares per participant | 5,000 | ||
Purchase price as a percentage of its market price on first trading day of each offering period | 85% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Weighted Average Assumptions Used in Black-Scholes Options Pricing Model (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected dividend yield | 0% | 0% |
Risk free interest rate | 3.90% | 1.40% |
Expected stock price volatility | 103.80% | 80.30% |
Expected term (years) | 6 years 1 month 6 days | 6 years 1 month 6 days |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Restricted Stock Units, Restricted Stock Awards and Performance Stock Units (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Unvested, Beginning balance | shares | 1,320,306 |
Shares, Granted | shares | 167,793 |
Shares, Vested | shares | (197,419) |
Shares, Canceled | shares | (20,070) |
Shares, Unvested Ending balance | shares | 1,270,610 |
Weighted Average Grant Date Fair Value, Unvested, Beginning balance | $ / shares | $ 10.78 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 2.30 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 19.48 |
Weighted Average Grant Date Fair Value, Canceled | $ / shares | 10.01 |
Weighted Average Grant Date Fair Value, Unvested Ending balance | $ / shares | $ 8.32 |
Performance Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Unvested, Beginning balance | shares | 177,698 |
Shares, Unvested Ending balance | shares | 177,698 |
Weighted Average Grant Date Fair Value, Unvested, Beginning balance | $ / shares | $ 18.78 |
Weighted Average Grant Date Fair Value, Unvested Ending balance | $ / shares | $ 18.78 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Fair Value of ESPP Used in Black-Scholes Options Pricing Model (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected dividend yield | 0% | 0% |
Risk free interest rate | 3.90% | 1.40% |
Expected stock price volatility | 103.80% | 80.30% |
Expected term (years) | 6 years 1 month 6 days | 6 years 1 month 6 days |
Employee Stock Purchase Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected dividend yield | 0% | |
Risk free interest rate | 4.80% | |
Expected stock price volatility | 192.50% | |
Expected term (years) | 6 months |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Computation of Diluted Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 27,684,755 | 3,290,691 |
Warrants to Purchase Common Stock | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 22,137,643 | 135,871 |
Options to Purchase Common Stock | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,883,035 | 2,120,086 |
Unvested restricted stock units and awards and performance stock units | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,448,308 | 987,423 |
Employee Stock Purchase Plan Shares | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 215,769 | 47,311 |
Net Loss Per Share - Additional
Net Loss Per Share - Additional Information (Details) | Mar. 31, 2023 shares |
Pre-Funded Warrants | |
Warrants to purchase share of common stock | 4,402,508 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||
Sales to related party | $ 1.1 | ||
Outstanding balances due from related party | $ 0.8 | $ 0 | |
Maximum | |||
Related Party Transaction [Line Items] | |||
Sales to related party | $ 0.1 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Apr. 17, 2023 USD ($) |
Subsequent Events | Vapotherm Technology Asia PTE. LTD | |
Subsequent Event [Line Items] | |
Subsidiary operating account balance | $ 250,000 |